​Securities Law of the People's Republic of China 中华人民共和国证券法（2019修订）

Securities Law of the People’s Republic of China‍ (Revised in 2019)‍

中华人民共和国证券法‍（2019修订）

‍

Presidential Decree No. 37

The revised Securities Law of the People's Republic of China passed by the 15th Session of the Standing Committee of the 13th National People's Congress on 28 December 2019 is hereby promulgated and shall be implemented with effect from 1 March 2020.

Xi Jinping

President of the People's Republic of China

28 December 2019

Securities Law of the People's Republic of China

(Passed by the Sixth Session of the Standing Committee of the Ninth National

People's Congress on 29 December 1998, amended for the first time pursuant to the Decision on Revision of the Securities Law of the People's Republic of China passed by the 11th Session of the Standing Committee of the Tenth National People's Congress on 28 August 2004, revised for the first time by the 18th Session of the Standing Committee of the Tenth National People's Congress on 27 October 2005, amended for the second time pursuant to the Decision on Revision of Twelve Laws Including the "Law of the People's Republic of China on the Protection of Cultural Relics" passed by the Third Session of the Standing Committee of the Twelfth National People's Congress on 29 June 2013, amended for the third time pursuant to the Decision on Revision of Five Laws Including the "Insurance Law of the People's Republic of China passed by the 10th Session of the 12th National People's Congress on 31 August 2014, and revised for the second time by the 15th Session of the Standing Committee of the 13th National People's Congress on 28 December 2019)

Chapter 1 General Principles

Article 1
This Law is enacted for the purposes of standardising the offering and trading of securities, protecting the legal rights and interests of the investors, safeguarding social and economic order and public interest, and promoting the development of the socialist market economy.

Article 2
The provisions of this Law shall apply to the offering and trading of shares, corporate bonds, depository receipts and other securities determined by the State Council pursuant to the law within the territory of the People's Republic of China;
for matters not stipulated in this Law, the provisions of the Company Law of the People's Republic of China and other laws and administrative regulations shall apply.

The provisions of this Law shall apply to listing and trading of government bonds and securities investment fund units;
where other laws and administrative regulations provide otherwise such provisions shall prevail.

Administrative measures on offering and trading of asset-backed securities and asset management products shall be formulated by the State Council in accordance with the principle of this Law.

Offering and trading of securities outside the People's Republic of China which disrupt the domestic market order of the People's Republic of China and harm the legitimate rights and interests of domestic investors shall be dealt with pursuant to the relevant provisions of this Law, and legal liability shall be pursued.

Article 3
Offering and trading of securities shall comply with the principles of transparency, equity and fairness.

Article 4
Parties engaging in offering and trading of securities shall enjoy equal legal status and shall comply with the principles of voluntary participation, compensation and honesty and trustworthiness.

Article 5
Offering and trading of securities shall comply with the provisions of laws and administrative regulations;
fraud, insider trading and manipulation of the securities market shall be prohibited.

Article 6
The securities industry and banking industry, trust industry and insurance industry shall implement industry operations and administration separately;
securities companies, banks, trust organisations and insurance organisations shall be established separately, unless otherwise provided by the State.

Article 7
The securities regulatory authority of the State Council shall implement unified supervision and administration on the securities market nationwide pursuant to the law.

The securities regulatory authority of the State Council may establish representative offices based on the actual needs to perform supervision and administration duties as authorised.

Article 8
State audit authorities shall carry out audit and supervision over stock exchanges, securities companies, securities registration and settlement organisations and securities regulatory authorities pursuant to the law.

Chapter 2 Securities Offering

Article 9
Public offering of securities shall satisfy the criteria provided in the laws and administrative regulations and shall be registered pursuant to the law with the securities regulatory authority of the State Council or the authorities empowered by the State Council. No organisation or individual shall issue securities to the public without registration pursuant to the law. The detailed scope and implementation workflow for registration of securities offering shall be stipulated by the State Council.

Any of the following scenarios shall be deemed as a public offering:

(1) offering of securities to non-specific targets;

(2) offering of securities to more than 200 specific targets, excluding the number of employees under an employee share option scheme implemented pursuant to the law;
and

(3) other offerings provided by the laws and administrative regulations.

Private offering of securities shall not adopt the methods of advertising, open solicitation and disguised publicity campaigns.

Article 10
Issuers adopting the underwriting method pursuant to the law for public offering of shares or corporate bonds which can be converted to shares, or making a public offering of other securities for which sponsorship is stipulated by laws and administrative regulations, shall appoint a securities company as the sponsor.

The sponsor shall comply with business rules and industry norms, be honest, trustworthy, responsible and diligent, conduct due diligence review on the application documents and information disclosure materials of the issuer, and supervise the conduct of the issuer.

Administrative measures on sponsors shall be formulated by the securities regulatory authorities of the State Council.

Article 11
Public offering of shares for the establishment of a company limited by shares shall satisfy the criteria stipulated in the Company Law of the People's Republic of China and other requirements stipulated by the securities regulatory authorities of the State Council;
an application for share offering and the following documents shall be submitted to the securities regulatory authorities of the State Council:

(1) articles of association of the company;

(2) promoters' agreement;

(3) name of promoters, shares subscribed by the promoters, type of capital contribution and capital verification certificate;

(4) prospectus;

(5) name and address of receiving bank;
and

(6) name of underwriter and the relevant agreement.

The sponsor's letter for offering issued by the sponsor shall be submitted if a sponsor is appointed pursuant to the provisions of this Law.

Where the laws and administrative regulations stipulate that establishment of the company is subject to approval, the relevant approval documents shall also be submitted.

Article 12
An initial public offering of new shares by a company shall satisfy the following criteria:

(1) the company has a proper and well-functioning organisation structure;

(2) the company is a going concern;

(3) the auditor has issued non-qualified audit reports for the company's financial accounting documents for the past three years;

(4) the issuer and its controlling shareholder(s), actual controlling party do not have criminal record during the past three years for corruption, bribery, encroachment of assets, misappropriation of assets or disruption of soclalist market economy order;
and

(5) other criteria stipulated by the securities regulatory authority of the State Council approved by the State Council.

Offering of new shares by listed companies shall satisfy the criteria stipulated by the securities regulatory authorities of the State Council and approved by the State Council;
detailed administrative measures shall be formulated by the securities regulatory authorities of the State Council.

Public offering of depository receipts shall satisfy the criteria for initial public offering of new shares, as well as any other criteria stipulated by the securities regulatory authorities of the State Council.

Article 13
For public offering of new shares, the company shall submit an application for share offering and the following documents:

(1) business licence of the company;

(2) articles of association of the company;

(3) resolution of a shareholders' general meeting;

(4) prospectus or any other public offering documents;

(5) financial accounting report;
and

(6) name and address of receiving bank.

The sponsor's letter for offering issued by the sponsor shall be also submitted if a sponsor is appointed pursuant to this Law. Where the public offering is underwritten pursuant to the provisions of this Law, the name of the underwriter and the relevant agreement shall also be submitted.

Article 14
A company shall use the funds raised from a public offering of shares in accordance with the usage purpose set out in the prospectus or other public offering documents;
change of fund usage purpose shall be resolved by a shareholders' general meeting. Where the usage purpose is changed without permission and not rectified, or not approved by a shareholders' general meeting, the public offering of new shares shall not be allowed.

Article 15
A public offering of corporate bonds by a company shall satisfy the following criteria:

(1) the company has a proper and well-functioning organisation;

(2) the average distributable profits for the past three years are sufficient to pay out one year's interest on the corporate bonds;
and

(3) other criteria stipulated by the State Council.

The funds raised from the public offering of corporate bonds shall be used in accordance with the usage purpose set out in the corporate bonds offering method;
change in fund usage purpose shall be resolved by a meeting of the bondholders. The funds raised from the public offering of corporate bonds shall not be used for making up losses and payment of non-operational expenditure.

Listed companies issuing convertible corporate bonds shall, in addition to satisfying the criteria stipulated in the first paragraph, comply with the provisions of the second paragraph of Article 12 of this Law. Exception applies where a list company make swap of corporate bonds through acquisition of the company's shares in accordance with the corporate bonds offering method.

Article 16
For public offering of corporate bonds, the following documents shall be submitted to the authorities empowered by the State Council or the securities regulatory authority of the State Council:

(1) business licence of the company;

(2) articles of association of the company;

(3) corporate bonds offering method;
and

(4) other documents stipulated by the authorities empowered by the State Council or the securities regulatory authority of the State Council.

The sponsor's letter for offering issued by the sponsor shall be also submitted if a sponsor is appointed pursuant to this Law.

Article 17
Under any of the following circumstances, a company shall not make another public offering of corporate bonds:

(1) it has defaulted on corporate bonds issued by way of public offering or other debts or delays in payment of principal and interest, and such default is still continuing;
or

(2) it has violated the provisions of this Law in changing the usage purpose for the funds raised from a public offering of corporate bonds.

Article 18
The format and submission method of the application documents for public offering of securities to be submitted by an issuer shall be stipulated by the authorities or department responsible for registration pursuant to the law.

Article 19
Application documents for securities offering submitted by an issuer shall fully disclose the information required for value judgement and investment decision-making by investors, and the contents shall be true, accurate and complete.

Securities service organisations and personnel issuing the relevant documents for securities offering shall perform the statutory duties strictly, and ensure that the documents issued are true, accurate and complete.

Article 20
An issuer applying for initial public offering of shares shall, upon submission of the application documents, disclose the relevant application documents in advance pursuant to the provisions of the securities regulatory authorities of the State Council.

Article 21
The securities regulatory authority of the State Council or the authorities empowered by the State Council shall be responsible for registration of securities offering applications in accordance with the statutory criteria. Detailed measures on registration of public offering of securities shall be stipulated by the State Council.

Pursuant to the provisions of the State Council, stock exchanges etc. may examine and approve applications for public offering of securities, determine if the issuer satisfies offering criteria and information disclosure requirements, and urge issuers to improve upon information disclosure contents.

Persons participating in registration of a securities offering application pursuant to the provisions of the two preceding paragraphs shall not be a stakeholder of the applicant, shall not accept gifts and donations from the applicant directly or indirectly, shall not hold securities under the said offering application, and shall not contact the applicant privately.

Article 22
The securities regulatory authority of the State Council or the authorities empowered by the State Council shall decide, within three months from acceptance of the application documents, on approval or non-approval of an application in accordance with the statutory requirements and procedures;
the time taken by an issuer to submit supplementary materials or make correction to its application documents as instructed shall be excluded from the three-month timeframe. Unsuccessful applicants shall be informed of the reason for non-approval.

Article 23
Upon registration of the application for securities offering, the issuer shall announce the public offering documents pursuant to the provisions of the laws and administrative regulations prior to the public offering of securities and place such documents at a designated venue for public inspection.

Prior to disclosure of information pertaining to securities offering pursuant to the law, insiders shall not disclose or divulge such information.

Issuers shall not issue securities prior to announcement of the public offering documents.

Article 24
Where the securities regulatory authority of the State Council or an authority empowered by the State Council discover(s) that a decision for registration of securities offering does not satisfy the statutory criteria or statutory procedures and that the offering is

not made yet, it shall revoke the decision and suspend the offering. Where the offering is made but the securities are yet to be listed, the decision for registration of offering shall be revoked, and the issuer shall refund the issue price plus interest on bank deposits for the same period to the securities holders;
the controlling shareholder(s), actual controlling party and the sponsor(s) shall bear liability with the issuer jointly and severally, except where they can prove that they are not at fault.

Where the issuer of the shares conceals important facts or fabricate significant false contents in securities offering documents such as the prospectus etc, and the shares are issued and listed, the securities regulatory authority of the State Council may order the issuer to make a buyback of the securities, or order the accountable controlling shareholder(s) and the actual controlling party to make a buyback of the securities.

Article 25
Where there is a change in the business and profits of the issuer after the share offering is made pursuant to the law, the issuer shall bear the responsibility;
investment risks arising from such change shall be borne by the investors.

Article 26
Where the laws and administrative regulations stipulate that an offering of securities to non-specific targets by an issuer is to be underwritten by a securities company, the issuer shall enter into an underwriting agreement with the securities company. Securities underwriting may take the form of best efforts or firm commitment.

Best efforts underwriting shall refer to the underwriting method under which a securities company sells the securities on behalf of the issuer and returns all unsold securities to the issuer upon expiry of the underwriting period.

Firm commitment underwriting shall refer to the underwriting method under which a securities company purchases all the securities from the issuer based on the agreement or purchases all unsold securities upon expiry of the underwriting period.

Article 27
An issuer making a public offering of securities shall have the right to appoint a securities company of their choice to be the underwriter pursuant to the law.

Article 28
A securities company underwriting securities shall enter into a best efforts agreement or firm commitment agreement with the issuer, setting out the following matters:

(1) name and address of the parties and name of their legal representative;

(2) type, quantity, amount and issue price of the securities underwritten on a best efforts or first commitment basis;

(3) the best efforts underwriting period or firm commitment underwriting period and the date of commencement and expiry;

(4) date and method of payment for best efforts underwriting or firm commitment underwriting;

(5) expenses and settlement method of best efforts underwriting or firm commitment underwriting;

(6) default liability;
and

(7) other matters stipulated by the securities regulatory authorities of the State Council.

Article 29
A securities company underwriting securities shall examine the veracity, accuracy and integrity of the public offering documents. Where the documents are found to contain false records, misrepresentation or major omission, the securities company shall not carry out selling activities;
where the selling activities have commenced, the securities company shall forthwith suspend the selling activities and adopt correction measures.

A securities company underwriting securities shall not commit any of the following acts:

(1) carry out false advertising or promotional activities to mislead investors;

(2) use unfair competition to solicit underwriting assignments;
or

(3) any other acts which violate the provisions on securities underwriting.

A securities company which commits any of the acts set out in the preceding paragraph and causes other securities underwriters or investors to suffer losses shall bear compensation liability pursuant to the law.

Article 30
Where a syndicate of underwriters is appointed for an offering of securities to non-specific targets, the syndicate of underwriters shall comprise the lead underwriter and securities companies participating in the underwriting.

Article 31
The maximum period for best efforts underwriting or firm commitment underwriting shall not exceed 90 days.

A securities company shall ensure that the securities underwritten on a best efforts basis or firm commitment basis are first sold to subscribers during the best efforts underwriting period or firm commitment underwriting period;
a securities company shall not reserve securities underwritten on a best efforts basis for themselves, or purchase in advance and retain securities under a firm commitment underwriting.

Article 32
Where the shares in an offering are issued at a premium, the issue price shall be negotiated and determined by the issuer and the securities company underwriting the offering.

Article 33
In a best efforts underwriting of shares, upon expiry of the best efforts underwriting period, the offering shall be deemed as unsuccessful if the number of shares sold to investors is below 70% of the proposed size of public share offering. The issuer shall refund the issue price plus interest on bank deposits for the same period to the share subscribers.

Article 34
Upon expiry of the best efforts underwriting or firm commitment underwriting period of a public share offering, the issuer shall file the outcome of share offering with the securities regulatory authority of the State Council within the stipulated period for records.

Chapter 3 Trading of Securities

Section 1 General Provisions

Article 35
Securities traded by the purchaser and seller in a securities transaction shall be securities which are issued and delivered pursuant to the law.

Securities which are not issued pursuant to the law shall not be traded.

Article 36
Where the Company Law of the People's Republic of China and other laws stipulate a moratorium period for transfer of securities issued pursuant to the law, such securities shall not be traded within the stipulated moratorium period.

Where a shareholders holding more than 5% of the shares of a listed company, the actual controlling party, director, supervisor and senior management personnel of a listed company, and any other shareholder of a listed company who holds shares issued prior to the issuer's initial public offering or holds shares issued by the listed company to specific targets, transfers the company's shares held by them, the transfer shall not violate laws, administrative regulations and the provisions of the securities regulatory authority of the State Council on holding period, selling time, selling quantity, selling method, information disclosure etc, and shall comply with the business rules of the stock exchange.

Article 37
Securities in a public offering shall be listed and traded on stock exchanges established pursuant to the law or traded on other nationwide securities trading venues approved by the State Council.

Privately-offered securities may be transferred on stock exchanges, other nationwide securities trading venues approved by the State Council, and regional equity markets established pursuant to the provisions of the State Council.

Article 38
Listing and trading of securities on a stock exchange shall adopt the open centralised trading mechanism or other methods approved by the securities regulatory authority of the State Council.

Article 39
Securities traded by securities trading parties may be in paper form or other forms stipulated by the securities regulatory authority of the State Council.

Article 40
Practitioners in the stock exchanges, securities companies and securities registration and settlement organisations, and staff of the securities regulatory authorities as well as other personnel prohibited by laws and administrative regulations from participating in shares trading shall not, during their term of appointment or the statutory period, hold shares, purchase and sell shares or other securities of equity nature, directly or by using a pseudonym or using other's name, and shall not accept shares or other securities of equity nature gifted by others.

Prior to taking up an appointment of the aforesaid posts, the aforesaid personnel shall transfer pursuant to the law such shares or other securities of equity nature held by them.

Practitioners of securities companies implementing an equity incentive plan or an employee share option scheme may hold or sell the company's shares or other securities of equity nature pursuant to the provisions of the securities regulatory authority of the State Council.

Article 41
Stock exchanges, securities companies, securities registration and settlement organisations, securities service organisations and their staff shall keep investor information confidential pursuant to the law, and shall not purchase and sell, provide or publicise investor information illegally.

Stock exchanges, securities companies, securities registration and settlement organisations, securities service organisations and their staff shall not divulge commercial secrets which have come into their knowledge.

Article 42
A securities service organisation and its personnel involved in issuing audit report or legal opinion etc. for an offering of securities shall not purchase or sell such securities within the underwriting period of the shares and within six months from expiry of the underwriting period.

In addition to the provisions in the preceding paragraph, a securities service organisation and its personnel which issue audit report or legal opinion etc for an issuer and its controlling shareholder(s) or actual controlling party, or the acquirer or a party in a significant asset transaction shall not purchase or sell the said securities from the date of acceptance of entrustment to expiry of the five-day period following the announcement of the aforesaid document(s). Where the work is commenced before acceptance of entrustment, they shall not purchase or sell the said securities from the date of actual commencement of the aforesaid work to the expiry of the five-day period following the announcement of the aforesaid document(s).

Article 43
Securities transaction fees shall be reasonable, and the fee items, fee rates and administrative measures shall be publicised.

Article 44
Where a shareholder holding more than 5% of the shares of a listed company or a company whose shares are traded on a nationwide stock exchange approved by the State Council, as well as a director, supervisor and senior management personnel, , sells the company's shares or other securities of equity nature that he/she holds within six months of purchase or buys again within six months of sale, the gains therefrom shall belong to the company, and the board of directors of the company shall collect such gains. Exception applies where a securities company holds more than 5% of the shares due to purchase of any remaining shares in a best efforts underwriting, or where there are any other circumstances stipulated by the securities regulatory authority of the State Council.

Shares or other securities of equity nature held by directors, supervisors, senior management personnel and natural person shareholders referred to in the preceding paragraph shall include shares or other securities of equity nature held by their spouse, parents, child(ren), and held by them using other's accounts.

Where the board of directors of the company fails to comply with the preceding paragraph, the shareholders shall have the right to demand that the board of directors comply within 30 days. Where the board of directors of the company fails to comply within the aforesaid period, the shareholders shall have the right to file a lawsuit directly in their own name with a people's court for the benefits of the company.

Where the board of directors of the company fails to comply with the provisions of the first paragraph, the directors who are accountable shall bear joint liability pursuant to the law.

Article 45
Program trading carried out via auto-generated or placed trading instructions through computer procedures shall comply with the provisions of the securities regulatory authority of the State Council, and be reported to the stock exchange, and shall not affect the stock exchange's system security or the order of normal trading.

Section 2 Listing of Securities

Article 46
An application for listing and trading of securities shall be submitted to the stock exchange, examined and approved by the stock exchange pursuant to the law, and both parties shall enter into a listing agreement.

The stock exchange shall arrange for listing and trading of government bonds in accordance with the decision of the authority empowered by the State Council.

Article 47
Applications for listing and trading of securities shall comply with the listing criteria stipulated in the listing rules of the stock exchange.

The listing criteria stipulated in the listing rules of the stock exchange shall include requirements on the years of operation, financial status, minimum public offering ratio and corporate governance, creditworthiness records etc of the issuer.

Article 48
Where listed securities fall under the delisting circumstances stipulated by the stock exchange, the stock exchange shall terminate its listing and trading in accordance with the business rules.

Where the stock exchange decides on delisting of securities, it shall promptly announce and file records with the securities regulatory authority of the State Council.

Article 49
Companies which object to the decision of a stock exchange on non-approval of listing or termination of listing and trading may apply to the review organisation established by the stock exchange for a review.

Section 3 Prohibited Trading Practices

Article 50
Persons privy to insider information and persons who obtain insider information illegally shall be prohibited from making use of insider information to carry out securities trading.

Article 51
Persons privy to insider information of securities transactions shall include:

(1) directors, supervisors and senior management personnel of the issuer;

(2) shareholder who holds more than 5% of the shares in the company, and the directors, supervisors, senior management personnel of such shareholder, as well as the actual controlling party of the company and its directors, supervisors and senior management personnel;

(3) companies controlled by the issuer and the directors, supervisors and senior management personnel of such companies;

(4) persons who have access to the relevant insider information of the company in the course of their work or business dealings with the company;

(5) the listed company's acquirer or significant asset transaction party, as well as its controlling shareholder(s), actual controlling party, directors, supervisors and senior management personnel;

(6) the relevant personnel of stock exchanges, securities companies, securities registration and settlement organisations and securities services organisations who have access to insider information in the course of their duties or work;
and

(7) staff of the securities regulatory authorities who have access to insider information in the course of their duties or work;

(8) civil servants of the relevant authorities and regulatory agencies who have access to insider information due to administration of offering and trading of securities or listed companies and the acquisition, significant asset transactions thereof in the course of their statutory duties;
and

(8) other persons stipulated by the securities regulatory authority of the State Council who may have access to insider information.

Article 52
In securities trading, undisclosed information which involve an issuer's operation, finance or have a significant impact on the market price of an issuer's securities are insider information.

Significant events set out in the second paragraph of Article 80 and the second paragraph of Article 81 hereof shall fall under the scope of insider information.

Article 53
Persons who are privy to insider information of securities trading and persons who obtain insider information illegally shall not before the insider information is made public, purchase or sell securities of the company, or divulge such information, or procure others to purchase or sell such securities.

Where a natural person, legal person, non-legal person organisation that holds more than 5% of the company's shares, solely or jointly with others through agreements or other arrangements purchases the shares of a listed company, if this Law stipulates otherwise, such provisions shall prevail.

Where an act of insider trading causes the investors to suffer losses, the doer shall bear compensation liability pursuant to the law.

Article 54
Practitioners of stock exchanges, securities companies, securities registration and settlement organisations, securities service organisations and other financial institutions, as well as staff of the relevant regulatory authorities or industry associations, are prohibited from making use of non-public information other than insider information they obtained in the course of work, so to engage in securities trading which relates to such information, or to instruct others explicitly or implicitly to carry out related transactions.

Where the use of undisclosed information in securities trading causes investors to suffer losses, the doer shall bear compensation liability pursuant to the law.

Article 55
Prohibit anyone from manipulating the securities market by any of the following means so as to influence or attempt to influence the price or volume of securities:

(1) consolidate the capital advantages or shareholding advantages, or access to information to make joint or successive transactions, either independently or through conspiracy;

(2) conspire with others to carry out mutual trading of securities at an agreed time, price and method;

(3) carry out securities trading between accounts controlled by the same person;
and

(4) make frequent or mass declarations and cancellation of declarations which are not meant for trading purpose;

(5) make use of false or uncertain significant information to induce investors into carrying out securities trading;

(6) make evaluation, forecast or investment recommendations on securities and issuers openly and carry out reverse securities trading;

(7) make use of activities in other related market to manipulate the securities market;
and

(8) other means of manipulating the securities market.

Where the manipulation of the securities market causes the investors to suffer losses, the doer shall bear compensation liability pursuant to the law.

Article 56
No organisation or individual shall fabricate or distribute fraudulent information to disrupt the order of the securities market.

Stock exchanges, securities companies, securities registration and settlement organisations, securities services organisations and their practitioners, as well as the securities industry association, securities regulatory authorities and their staff, shall be prohibited from making fraudulent representation or misleading information in securities trading.

All media shall disseminate securities market information in a truthful and objective manner and shall be prohibited from disseminating misleading information. All media and their staff reporting securities market information shall not engage in securities trading which has a conflict of interest with their job duties.

Anyone who fabricates, disseminates false information or misleading information to disrupt the securities market and causes investors to suffer losses shall bear compensation liability pursuant to the law.

Article 57
Securities companies and their practitioners are prohibited from engaging in the following activities which are harmful to the interests of their clients:

(1) carry out securities transactions for a client against his/her instruction;

(2) fail to provide written confirmation of transaction within the stipulated period;

(3) carry out securities transactions arbitrarily for a client without the client's instruction or use a client's name fraudulently to carry out securities transactions.

(4) induce a client to carry out unnecessary securities transactions so as to earn commission;
and

(5) other acts against the true intention of a client and harmful to the interests of a client.

Whoever violates the provisions of the preceding paragraph resulting in damages suffered by a client shall bear compensation liability pursuant to the law.

Article 58
No organisation or individual shall violate the provisions to lend their securities account or borrow other's securities account to carry out securities transactions.

Article 59
Widening of financing channels for listing shall be conducted pursuant to the law, and illegal capital inflow into the stock market are prohibited.

Investors are prohibited from trading securities with fiscal funds or bank credit funds in violation of regulations.

Article 60
Wholly State-owned enterprises, wholly State-owned companies and State-owned capital holding companies purchasing and selling listed shares shall comply with the relevant State provisions.

Article 61
Upon discovery of any prohibited trading behaviour in securities transactions, stock exchanges, securities companies, securities registration and settlement organisations, securities service organisations and their practitioners shall promptly report to the securities regulatory authorities.

Chapter 4 Acquisition of Listed Companies

Article 62
Investors may acquire a listed company by way of takeover bid, a scheme of arrangement and any other legitimate means.

Article 63
Where the shares, held by an investor through securities transactions on a stock exchange or jointly with others through an agreement or other arrangements, attain 5% of the issued voting rights shares of a listed company, the investor shall submit a written report to the securities regulatory authority of the State Council and the stock exchange within three days, notify the listed company and make an announcement;
the investor shall not purchase or sell the shares of the listed company within the aforesaid period, except under the circumstances stipulated by the securities regulatory authority of the State Council.

After an investor holds 5% of the issued voting rights shares of a listed company or jointly with others through an agreement or other arrangements, whenever the investor's voting rights shares in the said listed company are increased or reduced by 5%, the investor shall report and announce pursuant to the provisions of the preceding paragraph, and shall not purchase or sell the shares of the said listed company from the date of such occurrence to expiry of the three-day period following the announcement, except under the circumstances stipulated by the securities regulatory authority of the State Council.

After an investor holds 5% of the issued voting rights shares of a listed company or jointly with others through an agreement or other arrangements, whenever the investor's voting rights shares in the said listed company are increased or reduced by 1%, the investor shall notify the listed company on the day following such occurrence, and make an announcement.

For voting rights shares purchased against the provisions of the first paragraph and the second paragraph, the shareholder shall not exercise the voting rights of such shares which exceed the stipulated ratio within 36 months from the purchase.

Article 64
An announcement made pursuant to the provisions of the preceding article shall include the following contents:

(1) name and address of the shareholder;

(2) name and quantity of the shares held;
and

(3) the date on which the shareholding or change in shareholding attains the statutory ratio, and the source of funds for increase in shareholding;
and

(4) the timing and method of change in holding of voting rights shares in the listed company.

Article 65
Where the shares, held solely by an investor through securities transactions on a stock exchange or jointly with others through an agreement or other arrangements, attain 30% of the issued voting rights shares of a listed company, if the investor continues to carry out acquisition, the investor shall make a full or partial offer to all shareholders of the listed company pursuant to the law.

A partial offer for the shares of a listed company shall state that when the amount of shares undertaken to be sold by the shareholders of the target company exceeds the proposed number of shares to be acquired, the acquirer shall make an acquisition based on the ratio.

Article 66
An acquirer who makes a takeover offer pursuant to the provisions of the preceding Article shall announce the listed company takeover report, stating the following information:

(1) name and address of the acquirer;

(2) decision of the acquirer on the takeover;

(3) name of the target listed company;

(4) the objective of the takeover;

(5) detailed name of the shares to be acquired, and the proposed number of shares to be acquired;

(6) offer period and offer price;

(7) the amount of funds required for the takeover and funding assurance;
and

(8) the percentage of shareholding in the issued share capital of the target company, at the time of announcement of the acquisition report.

Article 67
The offer period for a takeover offer shall not be less than 30 days and shall not exceed 60 days.

Article 68
The acquirer shall not retract its takeover offer during the committed period specified in the takeover offer. Where it is necessary to change the takeover offer, the acquirer shall promptly make an announcement, stating details of the change, and shall not commit the following acts:

(1) reduce the takeover price;

(2) reduce the quantity of shares to be acquired;

(3) reduce the takeover offer period;
and

(4) any other acts stipulated by the securities regulatory authority of the State Council.

Article 69
The terms of a takeover offer shall apply to all the shareholders of the target company.

Where the listed company issues different types of shares, the acquirer may propose different terms of takeover offer for different types of shares.

Article 70
For an acquisition by way of takeover bid, the acquirer shall not sell shares of the target company during the acquisition period, and shall not purchase shares of the target company in any form other than the form stipulated in the offer and at terms which exceed the offer.

Article 71
For an acquisition by way of a scheme of arrangement, the acquirer may carry out share transfers with shareholders of the target company by way of arrangement pursuant to the provisions of laws and administrative regulations.

For an acquisition of a listed company by way of a scheme of arrangement, the acquirer shall submit a written report within three days from conclusion of the acquisition arrangement to the securities regulatory authority of the State Council and the stock exchange, and make an announcement.

The acquisition agreement shall not be performed prior to the announcement.

Article 72
For an acquisition by way of a scheme of arrangement, both parties to the arrangement may temporarily entrust a securities registration and settlement organisation with custody of the shares under the arrangement and deposit the funds with a designated bank.

Article 73
For an acquisition by way of a scheme of arrangement, when the shares acquired by the acquirer solely or acquired jointly with others through an agreement or other arrangements attain 30% of the voting rights shares of a listed company, and the acquirer continues to acquire shares, the offeror shall make a full or partial offer to all the shareholders of the listed company. Exception applies where the securities regulatory authority of the State Council waives the requirement for making an offer.

For a takeover bid made pursuant to the provisions of the preceding paragraph, the acquirer shall comply with the provisions of the second paragraph of Article 65, Article 66 to Article 70 of this Law.

Article 74
Upon expiry of the acquisition period, if the equity distribution

of the target company no longer satisfies the listing requirements stipulated by the stock exchange, the shares of the said listed company shall be delisted by the stock exchange pursuant to the law;
other shareholders who still hold shares of the target company shall have the right to sell their shares to the acquirer under the terms of the acquisition offer, and the acquirer shall acquire such shares.

Upon completion of takeover, where the target company no longer satisfies the conditions of a company limited by shares, it shall change its enterprise form pursuant to the law.

Article 75
In the acquisition of a listed company, the shares in the target listed company held by the acquirer shall not be transferred within 18 months from completion of the acquisition.

Article 76
Upon completion of acquisition, where the acquirer and the target company are merged, and the target company is dissolved, the original shares of the dissolved company shall be replaced by the acquirer pursuant to the law.

The acquirer shall submit a report on the takeover status to the securities regulatory authority of the State Council and the stock exchange within 15 days from completion of takeover, and make an announcement.

Article 77
The securities regulatory authority of the State Council shall formulate the detailed measures on acquisition of listed companies pursuant to this Law.

For division of a listed company or merger with another company, the listed company shall report to the securities regulatory authority of the State Council, and make an announcement.

Chapter 5 Information Disclosure

Article 78
Issuers and other information disclosure obligors stipulated by laws, administrative regulations and the securities regulatory authority of the State Council shall promptly perform information disclosure obligation pursuant to the law.

Information disclosed by information disclosure obligors shall be true, accurate and complete, concise and clear, easy to understand, and shall not contain false records, misrepresentation or major omission.

For securities which are issued and traded simultaneously in China and overseas, information disclosed overseas by the information disclosure obligors shall be disclosed simultaneously in China.

Article 79
Listed companies, companies whose corporate bonds are listed and traded, and companies whose shares are traded on other nationwide securities trading venues approved by the State Council shall formulate regular reports in accordance with the contents and format stipulated by the securities regulatory authority of the State Council and the stock exchange, and submit and announce the regular reports pursuant to the following provisions:

(1) annual reports shall be submitted and announced within four months from end of each accounting year, and annual financial accounting reports therein shall be audited by an accounting firm which complies with the provisions of this Law;
and

(2) ad hoc reports shall be submitted and announced within two months from end of the first half year of each accounting year.

Article 80
Upon occurrence of a significant event which may have a relatively significant impact on the share trading price of a listed company or a company whose shares are traded on any other nationwide securities trading venues approved by the State Council, if the investors are yet to be informed, the company shall forthwith submit an ad hoc report on information of the said significant event to the securities regulatory authority of the State Council and the securities trading venues, and make an announcement, stating the cause of the event, the current status and the possible legal consequences.

Significant events referred to in the preceding paragraph shall include:

(1) significant change in the business strategy and scope of business;

(2) significant investments of the company, the significant assets purchased and sold by the company within a year which exceed 30% of the company's total assets, or a one-time mortgage, pledge, disposal or scrapping of key assets used in the company's operation which exceeds 30% of such assets;

(3) the company enters into a significant contract, provides significant guarantee or enters into related party transactions, which may have a significant impact on the company's assets, liabilities, rights and interests and business performance;

(4) the company incurs major debts and defaults on repayment of major debts which are due;

(5) the company incurs serious damages or serious losses;

(6) significant change in the external conditions of the company's business operation;

(7) there is a change in the company's directors or in more than one-third of the supervisors or managers, and the Chairman or the managers is/are unable to perform the duties;

(8) change in shareholding or controlling stake of shareholders holding more than 5% of the company's shares or the actual controlling party, and relatively significant change in businesses undertaken by the company's actual controlling party and other enterprises it controls which are identical or similar to the company's businesses;

(9) the company's plan for profit distribution and capital increase, significant change in the company's equity structure, the company's decision on capital reduction, merger, division, dissolution and application for bankruptcy, or where the company is in bankruptcy proceedings or ordered to close down pursuant to the law;

(10) the company is involved in a major litigation or arbitration, and a resolution passed by the company's shareholders' general meeting or board of directors is revoked or declared invalid pursuant to the law;

(11) the company is undergoing investigation pursuant to the law for an alleged criminal offence, and the company's controlling shareholders, actual controlling party, directors, supervisors or senior management personnel are subject to enforcement measures pursuant to the law for an alleged criminal offence;
and

(12) any other matters stipulated by the securities regulatory authority of the State Council.

Where the company's controlling shareholder(s) or actual controlling party has/have a relatively significant impact on the occurrence or progress of a significant event, they shall promptly notify the company in writing of the relevant information, and cooperate with the company in performance of information disclosure obligation.

Article 81
Upon occurrence of a significant event which may have a significant impact on the trading price of listed corporate bonds and the investors are yet to be informed, the company shall forthwith submit an ad hoc report on information of the said significant event to the securities regulatory authority of the State Council and the stock exchange, and make an announcement, stating the cause of the event, the current status and the possible legal consequences.

Significant events referred to in the preceding paragraph shall refer to:

(1) significant change in the company's equity structure or production and business status;

(2) change in credit rating of the corporate bonds;

(3) mortgage, pledge, sale, transfer or scrapping of the company's significant assets;

(4) the company is unable to repay debts which are due;

(5) the company's additional borrowings or guarantee to external parties exceed 20% of the net assets as at end of the preceding year;

(6) the creditor's rights or assets waived by the company exceed 10% of the net assets as at end of the preceding year;

(7) the company incurs significant losses which exceed 10% of the net assets as at end of the preceding year;

(8) the company distributes dividends and makes decisions on capital reduction, merger, division, dissolution and bankruptcy application, or the company is in bankruptcy proceedings or ordered to close down pursuant to the law;

(9) major litigation or arbitration involving the company;

(10) the company is under investigation pursuant to the law for an alleged criminal offence, and the company's controlling shareholder(s), actual controlling party, directors, supervisors and senior management personnel are subject to enforcement measures pursuant to the law for an alleged criminal offence;
and

(11) any other matters stipulated by the securities regulatory authority of the State Council.

Article 82
The directors and senior management personnel of the issuer shall sign the written confirmation opinion for securities offering documents and regular reports.

The board of supervisors of the issuer shall examine the securities offering documents and regular reports formulated by the board of directors and issue a written examination opinion. The supervisors shall sign the written confirmation opinion.

The directors, supervisors and senior management personnel of the issuer shall ensure that the issuer discloses information promptly and fairly, and that the information disclosure is true, accurate and complete.

Where the directors, supervisors and senior management personnel are unable to assure the veracity, accuracy and integrity of the contents of the securities offering documents and regular reports or have objection thereto, they shall express their opinion in the written confirmation opinion and state the reason, and the issuer shall disclose. Where the issuer does not disclose, the directors, supervisors and senior management personnel may apply for disclosure directly.

Article 83
Information disclosed by information disclosure obligors shall be disclosed to all investors at the same time and shall not be disclosed beforehand to any organisation or individual, unless otherwise stipulated by laws and administrative regulations.

No organisation or individual shall illegally require an information disclosure obligor to provide information which are required to be disclosed by law but yet to be disclosed. Any organisation and individual that are aware of the aforesaid information beforehand shall keep the information confidential before the information is disclosed pursuant to the law.

Article 84
In addition to the information which are required to be disclosed by law,

information disclosure obligors may voluntarily disclose information which relates to value judgement and investment decision-making by investors, but such information shall not contradict the information which are required to be disclosed by law, and shall not mislead investors.

An issuer and its controlling shareholders, actual controlling party, directors, supervisors, senior management personnel etc. making public commitments shall disclose. Where non-performance of commitment causes investors to suffer losses, they shall bear compensation liability pursuant to the law.

Article 85
Where an Information disclosure obligor fails to disclose information pursuant to the provisions, or the announced securities offering documents, regular reports, ad hoc reports and other information disclosure materials contain false records, misrepresentation or material omission, causing investors to suffer losses in securities trading, the information disclosure obligor shall bear compensation liability;
the issuer's controlling shareholder(s), actual controlling party, directors, supervisors, senior management personnel and other directly accountable personnel, as well as the sponsor, the underwriter and their directly accountable personnel shall bear compensation liability jointly and severally with the issuer, except where they can prove that they are not at fault.

Article 86
Information which are required to be disclosed by law shall be published on the stock exchange's website and media which satisfy the criteria stipulated by the securities regulatory authority of the State Council, and simultaneously placed at the domicile of the company and the stock exchange for public inspection.

Article 87
The securities regulatory authority of the State Council shall supervise and manage the information disclosure activities of information disclosure obligors.

Stock exchanges shall supervise information disclosure by information disclosure obligors who trade securities organised by the stock exchange and urge them to disclose information in a timely and accurate manner pursuant to the law.

Chapter 6 Investor Protection

Article 88
When a securities company sells securities and provides services to an investor, it shall, pursuant to the provisions, fully understand the basic information, property conditions, conditions of financial assets, investment knowledge and experience, professional expertise etc. of the investor;
explain the key contents of the securities and services truthfully, and fully disclose investment risks;
sell and provide securities and services which match the aforesaid conditions of the investor.

At the time of purchasing securities or accepting services, the investor shall provide the information set out in the preceding paragraph truthfully in accordance with the express requirements stipulated by the securities company. Where the investor refuses to provide or does not provide information in accordance with the requirements, the securities company shall inform the investor of the consequences, and refuse to sell securities and provide services pursuant to the provisions.

Where the securities company violates the provisions of the first paragraph and causes investors to suffer losses, it shall bear the corresponding compensation liability.

Article 89
Investors may be divided into normal investors and professional investors based on property conditions, financial asset conditions, investment knowledge and experience, professional expertise etc. The standards for professional investors shall be stipulated by the securities regulatory authority of the State Council.

Where there is a dispute between a normal investor and a securities company, the securities company shall prove that its action complies with laws, administrative regulations and the provisions of the securities regulatory authority of the State Council. Where the securities company is unable to prove, it shall bear the corresponding compensation liability.

Article 90
An investor protection organisation (hereinafter referred to as the "investor protection organisation") established by the board of directors, independent directors or shareholders holding more than 1% of the voting rights shares of a listed company or established pursuant to laws, administrative regulations or the provisions of the securities regulatory authority of the State Council may act as a solicitor, either by itself or by entrusting a securities company or a securities service organisation, to openly request the shareholders of the listed company to entrust the investor protection organisation to attend a shareholders' general meeting on their behalf, and to exercise shareholder's rights such as the right to propose a motion and to vote etc. on their behalf.

When the solicitor collects shareholder's rights pursuant to the provisions of the preceding paragraph, it shall disclose the collection documents, and the listed company shall cooperate.

It is prohibited to solicit shareholder's rights publicly in a paid or disguised paid manner.

Where the solicitation of shareholder's rights violates laws, administrative regulations or the relevant provisions of the securities regulatory authority of the State Council, causing the listed company or other shareholders to suffer losses, compensation liability shall be borne pursuant to the law.

Article 91
Listed companies shall specify in their articles of association the detailed arrangements and decision-making procedures for distributing cash dividends and protect the shareholders' rights to return on assets pursuant to the law.

Where a listed company has a profit after making up losses and accrual of statutory reserve from the current year's profit after tax, it shall distribute cash dividends in accordance with the provisions of the company's articles of association.

Article 92
For public offering of corporate bonds, a meeting of bondholders shall be established, and the convening procedures, rules of procedure and other significant matters of meetings of bondholders shall be stated in the prospectus.

For public offering of corporate bonds, the issuer shall engage a bond trustee for the bondholders and enter into a bond trustee management agreement with the bond trustee. The bond trustee shall be the underwriter of the current offering, or an organisation recognised by the securities regulatory authority of the State Council;
the meeting of bondholders may resolve on change of bond trustee. The bond trustee shall be diligent and responsible, perform entrusted management duties equitably, and shall not harm the interests of bondholders.

Where the issuer of bonds fails to pay the principal and interest of the bonds on schedule, the bond trustee may be entrusted by all or some of the bondholders, to initiate or participate in a civil lawsuit or liquidation proceedings on behalf of the bondholders in his/her own name.

Article 93
Where an issuer commits fraudulent offering, misrepresentation or any other major legal violation, thus causing investors to suffer losses, the issuer's controlling shareholder(s), actual controlling party and the relevant securities company may entrust the investor protection organisation to reach an agreement on compensation matters with the investors who have suffered losses, and make compensation first. After making compensation in advance, they may seek recourse from the issuer and other parties who are jointly and severally liable.

Article 94
Where there is a dispute between an investor and the issuer or the securities company etc, both parties may apply to the investor protection organisation for mediation. Where there is a dispute between a normal investor and a securities company over a securities transaction, and the normal investor requests for mediation, the securities company shall not refuse.

The investor protection organisation may support the investors pursuant to the law to file a lawsuit with a people's court against an act which harms the interests of investors.

Where the issuer's directors, supervisors, senior management personnel violates laws, administrative regulations or the provisions of the company's articles of association in the performance of corporate duties and causes the company to suffer losses, or where the issuer's controlling shareholder(s) or actual controlling party etc infringes upon the company's legitimate rights and interests and causes the company to suffer losses, if the investor protection organisation holds the shares of the said company, it may file a lawsuit with a People's Court in its own name for the company's interests, and the shareholding ratio and shareholding period shall not be subject to restrictions stipulated in the Company Law of the People's Republic of China.

Article 95
When an investor files a securities civil compensation lawsuit pertaining to misrepresentation etc, if the litigation subject matter is the same type and there are multiple persons in one party, a representative may be appointed for the lawsuit pursuant to the law.

In a lawsuit filed pursuant to the provisions of the preceding paragraph, where there may be many other investors who have the same litigation request, the People's Court may make an announcement, state the information of the case of the said litigation request, and notify the investors to register with the People's Court within a certain period. The judgment or ruling of the People's Court are binding on the investors who participate in the registration.

An investor protection organisation entrusted by more than 50 investors may participate in the lawsuit as a representative, and register with a People's Court pursuant to the provisions of the preceding paragraph for rights holders who are confirmed by a

securities registration and settlement organisation, except where the investors clearly state that they are unwilling to participate in the lawsuit.

Chapter 7 Stock Trading Venues

Article 96
Stock exchanges and other nationwide securities trading venues approved by the State Council shall provide the venue and facilities for centralised trading of securities, organise and supervise securities trading, implement self-regulatory administration, complete registration pursuant to the law, and obtain legal person status.

Establishment, change and dissolution of stock exchanges and other nationwide securities trading venues approved by the State Council shall be determined by the State Council.

The organisation, administrative measures etc for other nationwide securities trading venues approved by the State Council shall be stipulated by the State Council.

Article 97
Stock exchanges and other nationwide securities trading venues approved by the State Council may establish different market tiers in accordance with factors such as type of securities, industry characteristics, scale of company etc.

Article 98
Regional equity markets established pursuant to the provisions of the State Council shall provide the premises and facilities for offering and transfer of privately-offered securities;
detailed administrative measures shall be stipulated by the State Council.

Article 99
Stock exchanges shall perform self-regulatory administrative duties, comply with the principle of prioritising public interest, and safeguard market fairness, order and transparency.

A set of articles of association shall be formulated for establishment of a stock exchange. Formulation and amendment of the articles of association of a stock exchange shall be subject to approval of the securities regulatory authority of the State Council.

Article 100
The words "stock exchange" shall be included in the name of a stock exchange. Other organisation or individual shall not use the name of a stock exchange or a similar name.

Article 101
The disposable revenue of a stock exchange from various fees shall first be used to ensure the normal operation and gradual improvement of the exchange's securities trading venues and facilities.

The asset accumulation of a stock exchange that implements a membership system is owned by the exchange's members, and its rights and interests are shared by the members. During its existence, the property accumulation shall not be distributed to members.

Article 102
Stock exchanges which implement a membership system shall establish a council and a board of supervisors.

A stock exchange shall appoint a general manager who is appointed and removed by the securities regulatory authority of the State Council.

Article 103
Under the circumstances specified in Article 146 of the Company Law of the People's Republic of China or one of the following circumstances, a person shall not be appointed as the person-in-charge of a stock exchange:

(1) the person-in-charge of a stock exchange or securities registration and settlement organisation, or a director, supervisor or senior manager of a securities company who was dismissed due to an illegal act or disciplinary violation committed, and a five-year period has not elapsed since the date of dismissal;
and

(2) a lawyer, a certified public accountant or a professional staff member of a securities service organisation whose practice certificate was revoked or whose qualifications were cancelled due to an illegal act or disciplinary violation committed, and a period of five years has not elapsed since the date of revocation of practice certificate or cancellation of qualification.

Article 104
Practitioners of a stock exchange, securities registration and settlement organisation, securities service organisation or securities company who were dismissed due to an illegal act or disciplinary violation committed, as well as civil servants of State agencies who were dismissed, shall not be employed by a stock exchange.

Article 105
Participants of centralised trading on a stock exchange which implements a membership system shall be limited to members of the stock exchange. The stock exchange shall not allow non-members to participate directly in centralised trading of shares.

Article 106
An investor shall enter into a securities trading entrustment agreement with a securities company, and open a real-name securities trading account with the securities company, and instruct the securities company to purchase and sell securities on his/her behalf in writing, via telephone instruction, self-service terminal instruction or online instruction etc.

Article 107
Securities companies opening accounts for investors shall, pursuant to the provisions, verify the identity information provided by the investor.

Securities companies shall not provide the account of an investor for others to use.

Investors shall use their real-name accounts for trading.

Article 108
Securities companies shall submit a declaration of securities transaction in accordance with the instruction of the investor and pursuant to the securities trading rules, participate in centralised trading on the stock exchange, and assume the corresponding liability for settlement and delivery based on the trading outcome. Securities registration and settlement organisations shall carry out settlement and delivery of securities and funds with the securities companies based on the trading outcome and in accordance with the settlement and delivery rules, and handle registration and transfer formalities for the clients of the securities companies.

Article 109
Stock exchanges shall provide guarantee for the organization of centralised trading in a fair manner, announce real time market information for securities trading, formulate and publish a market chart for trading day.

The right and interests of real time market information of securities transactions shall belong to the stock exchange pursuant to the law. No organisation or individual shall publish real time market information of securities transactions without the consent of the stock exchange.

Article 110
A listed company may apply to the stock exchange for suspension of trading or resumption of trading for its listed shares but shall not abuse the suspension of trading or resumption of trading to harm the legitimate rights and interests of investors.

The stock exchange may decide on suspension of trading or resumption of trading of listed shares pursuant to the provisions of the business rules.

Article 111
Where the occurrence of an emergency such as force majeure, accident, major technical breakdown, serious human error etc affects the normal conduct of securities trading, to safeguard the normal order of securities trading and maintain market fairness, the stock exchange may adopt technical measures such as technical suspension, stock halt etc in accordance with the business rules, and shall promptly report to the securities regulatory authority of the State Council.

Where the occurrence of an emergency stipulated in the preceding paragraph causes significant unusual securities trading outcome, if delivery of securities in accordance with the trading outcome has a significant impact on the normal order of securities trading and market fairness, the stock exchange may take measures such as cancelling transactions and notifying securities registration and settlement organisation to suspend settlement in accordance with business rules, and shall promptly report to the securities regulatory authority of the State Council and make an announcement.

The stock exchange shall not bear civil compensation liability for losses incurred as a result of the measures it has taken pursuant to the provisions of this Article, except where there is a major fault.

Article 112
Stock exchanges shall implement real time monitoring of securities transactions, and report abnormal transactions in accordance with the requirements of the securities regulatory authority of the State Council.

The stock exchange may, based on the needs and in accordance with the business rules, restrict trading by investors whose securities accounts show significant abnormal transactions, and promptly report to the securities regulatory authority of the State Council.

Article 113
Stock exchanges shall strengthen risk monitoring for securities trading, and where there is significant unusual fluctuation, the stock exchange may, in accordance with the business rules, adopt measures such as restriction of trading, mandatory suspension of trading etc., and report to the securities regulatory authority of the State Council;
where the stability of securities market is seriously compromised, the stock exchange may, in accordance with the business rules, adopt measures such as stock halt and make an announcement.

The stock exchange shall not bear civil compensation liability for losses incurred due to measures adopted pursuant to the provisions of this Article, except where there is a major fault.

Article 114
Stock exchanges shall accrue a certain percentage of trading fees, membership fees and seat fees collected to establish a risk fund. The risk fund shall be managed by the council of the stock exchange.

The specific ratio for accruals to the risk fund and the method of use thereof shall be formulated by the securities regulatory authority of the State Council jointly with the finance department of the State Council.

Stock exchanges shall deposit their risk fund into a designated bank account and shall not use the risk fund arbitrarily.

Article 115
Stock exchanges shall formulate listing rules, trading rules, member management rules and other relevant business rules pursuant to laws, administrative regulations and the provisions of the securities regulatory authority of the State Council, and submit such rules to the securities regulatory authority of the State Council for approval.

Securities trading on a stock exchange shall comply with the business rules formulated pursuant to the law by the stock exchange. Violation of the business rules shall be subject to disciplinary action or other self-regulatory measures imposed by the stock exchange.

Article 116
The person-in-charge and other practitioners of a stock exchange shall abstain from handling a securities transaction in which he/she or any of his/her relatives is an interested party.

Article 117
The trading outcome of a securities transaction carried out in accordance with the trading rules formulated pursuant to the law shall not be varied, except under the circumstances stipulated in the second paragraph of Article 111. The civil liability of the parties to an illegal transaction shall not be waived;
gains on illegal transactions shall be handled pursuant to the relevant provisions.

Chapter 8 Securities Companies

Article 118
Establishment of a securities company shall be subject to examination and approval by the securities regulatory authority of the State Council.

(1) the articles of association of the securities company shall comply with the provisions of laws and administrative regulations;

(2) the key shareholder(s) and the actual controlling party of the company shall have good financial status and creditworthiness records, and have no record of major violation during the past three years;

(3) the registered capital of the company shall comply with the provisions of this Law;

(4) the directors, supervisors, senior management personnel and practitioners shall satisfy the criteria stipulated in this Law;

(5) proper risk management and internal control systems are in place;

(6) the business premises, business facilities and information technology system satisfy the criteria;
and

(7) satisfies all other requirements stipulated by laws, administrative regulations and the securities regulatory authority of the State Council.

Without approval of the securities regulatory authority of the State Council, no organisation or individual shall carry out securities business activities in the name of a securities company.

Article 119
The securities regulatory authority of the State Council shall, within six months from acceptance of an application for establishment of securities company, examine the application in accordance with statutory criteria and statutory procedures and the principle of prudential supervision, decide on approval or non-approval, and notify the applicant;
where the application is not approved, the reason shall be stated.

Where an application for establishment of securities company is approved, the applicant shall complete establishment registration with the company registration authority within the stipulated period and obtain a business licence.

Securities companies shall apply to the securities regulatory authority of the State Council for a securities business permit within 15 days from obtaining the business licence. Securities companies which have not obtained a securities business permit shall not operate securities business.

Article 120
Subject to approval of the securities regulatory authority of the State Council, a securities company may engage in all or some of the following businesses:

(1) securities brokerage;

(2) securities investment advisory;

(3) financial advisory relating to securities trading and securities investment activities;

(4) securities underwriting and sponsoring;

(5) margin trading and short-selling;

(6) securities market making;

(7) proprietary securities business;
and

(8) other securities businesses.

The securities regulatory authority of the State Council shall, within three months from the date of acceptance of an application for a matter stipulated in the preceding paragraph, examine the application in accordance with statutory criteria and procedures, decide on approval or non-approval, and notify the applicant;
where the application is not approved, the reason shall be stated.

Securities companies operating securities asset management business shall comply with the provisions of the Securities Investment Fund Law of the People's Republic of China and other laws and administrative regulations.

Except for securities companies, no organisation or individual shall engage in securities underwriting, securities sponsorship, securities brokerage and securities margin trading and short-selling businesses.

Securities companies engaging in securities margin trading and short-selling business shall adopt measures to prevent and control risks stringently and shall not violate the provisions to lend funds or securities to their clients.

Article 121
For securities companies operating businesses set out in item (1) to item (3) of the first paragraph of Article 120 of this Law, the minimum registered capital shall be RMB50 million;
for securities companies operating any of the businesses set out in item (4) to item (8), the minimum registered capital shall be RMB100 million;
for securities companies operating two or more businesses set out in item (4) to item (8), the minimum registered capital shall be RMB500 million. The registered capital of securities companies shall be fully paid-up.

The securities regulatory authority of the State Council may adjust the minimum amount of registered capital based on the principle of prudential supervision and the risk extent of the business, however the adjusted amount shall not be lower than the relevant amount provided in the preceding paragraph.

Article 122
Change of scope of securities business, change of key shareholders or the company's actual controlling party, merger, division, closure, dissolution and bankruptcy of a securities company shall be subject to approval by the securities regulatory authority of the State Council.

Article 123
The securities regulatory authority of the State Council shall stipulate net capital and other risk control indicators for securities companies.

Securities companies shall not provide financing or guarantee for their shareholders or related parties of the shareholders.

Article 124
The directors, supervisors and senior management personnel of securities companies shall be honest, morally upright, be familiar with the provisions of securities laws and administrative regulations and possess business management abilities to perform their duties. Appointment and removal of directors, supervisors and senior management personnel of securities company shall be filed with the securities regulatory authority of the State Council.

The following persons or persons stated in Article 146 of the Company Law of the People's Republic of China shall not be appointed as a director, supervisor or senior management personnel of a securities company:

(1) the person-in-charge of a stock exchange or securities registration and settlement organisation, or a director, supervisor or senior manager of a securities company was dismissed for an illegal act or disciplinary violation committed, and a period of five years has not elapsed since the date of dismissal;

and

(2) a lawyer, a certified public accountant or a professional staff member of a securities service organisation whose practice license has been revoked or disqualified for an illegal act or disciplinary violation committed, and a period of five years has not elapsed from the date on which their practice license was revoked or disqualified.

Article 125
Securities practitioners of securities companies shall be morally upright, and possess the professional expertise required for conducting securities business.

Practitioners of a stock exchange, securities registration and settlement organisation, securities service organisation or securities company who were dismissed for an illegal act or disciplinary violation, as well as civil servants of State agencies who were dismissed, shall not be employed by a stock exchange.

Civil servants of State agencies and other personnel prohibited by the laws and administrative regulations to hold concurrent position in a company shall not hold concurrent position in a securities company.

Article 126
A securities investors protection fund shall be established by the State. The securities investors protection fund shall comprise funds contributed by the securities companies and other funds raised pursuant to the law. Detailed measures on fund scale, fundraising, management and usage shall be formulated by the State Council.

Article 127
Securities companies shall accrue a trading risk reserve from their annual business revenue, to be used for recovery of securities trading losses;
the specific accrual ratio shall be stipulated by the securities regulatory authority of the State Council jointly with the finance department of the State Council.

Article 128
Securities companies shall establish a proper internal control system and adopt effective separation measures to prevent conflict of interests between the company and its clients and among the clients.

Securities companies shall separate their securities brokerage business, securities underwriting business, securities proprietary business, securities market making and securities asset management business;
mixed operations shall not be allowed.

Article 129
The proprietary business of a securities company shall be conducted in its own name and shall not be conducted in the name of others or in the name of an individual.

The proprietary business of a securities company shall use its own funds and funds raised pursuant to the law.

Securities companies shall not lend their proprietary account to others for use.

Article 130
Securities companies shall carry out business prudently pursuant to the law, be diligent and responsible, honest and trustworthy.

The business activities of a securities company shall correspond to its governance structure, internal control, compliance management as well as risk control indicators, practitioners' composition etc, and comply with the requirements of prudent supervision and protection of legitimate rights and interests of investors.

Securities companies shall have the rights to operate independently pursuant to the law and their legitimate operations shall not be interfered with.

Article 131
The trading settlement funds of the clients of a securities company shall be deposited with a commercial bank and shall be managed under a separate account opened in the name of each client.

Securities companies shall not classify the trading settlement funds and securities of their clients as their own assets. No organisation or individual shall misappropriate the trading settlement funds and securities of their clients in any form. Where a securities company is bankrupt or under liquidation, the trading settlement funds and securities of their clients shall not be classified under bankruptcy assets or liquidation assets. The trading settlement funds and securities of a client shall not be seized, frozen, deducted or enforced, unless for the client's own debts or under other circumstances provided by the laws.

Article 132
Securities companies engaging in brokerage business shall provide a standardised letter of entrustment for securities trading for use by the principals. Entrustment records shall be kept for other forms of entrustment.

Regardless of whether the client's securities trading entrustment is completed or not, its entrustment records shall be kept in the securities company for the stipulated period.

Article 133
A securities company being entrusted to trade securities shall trade on behalf of the client in accordance with the trading rules and based on the description, purchase or sell quantity, price offering method and price range etc. set out in the letter of entrustment, and shall keep proper records of trading;
upon completion of a deal, a trading slip shall be produced and delivered to the client in accordance with the regulations.

The reconciliation statement which confirms a transaction and the trading outcome for each transaction shall be truthful, to ensure consistency between the balance of the securities on the books and actual holding of the securities.

Article 134
Securities companies engaging in brokerage business shall not accept discretionary orders of the clients to decide on securities trading, select the types of securities or decide on purchasing or selling quantity or purchasing or selling price.

Securities companies shall not allow others to participate in centralised trading directly in the name of the securities company.

Article 135
Securities companies shall not give undertaking to the clients in respect of gains on securities trading or compensation of securities trading losses.

Article 136
Where a practitioner of a securities company violates trading rules in securities trading activities when executing instructions of the securities company or making use of his/her work capacity, the securities company shall bear full liability.

A securities company and its practitioners shall not accept clients' entrustment for securities trading in private.

Article 137
Securities companies shall establish a client information enquiry system, to ensure that their clients can enquire into account information, entrustment records, trading records as well as other important information which relates to acceptance of services or purchase of products.

Securities companies shall retain all information on account opening, entrustment records, trading records, internal management and business operations properly;
no one shall conceal, forge, tamper with or destroy such information. The aforesaid information shall be retained for a period of not less than 20 years.

Article 138
Securities companies shall submit their business and financial information and materials to the securities regulatory authority of the State Council pursuant to the provisions. The securities regulatory authority of the State Council shall have the right to require a securities company and its shareholders and actual controlling party to provide the relevant information and materials within a stipulated period.

Information and materials submitted by securities companies and their shareholders and actual controlling party to the securities regulatory authority of the State Council shall be true, accurate and complete.

Article 139
The securities regulatory authority of the State Council may, where it deems necessary, appoint an accounting firm, an asset valuation organisation to conduct an audit of the financial status, internal control status, and valuation of the assets of a securities company. Detailed measures shall be formulated by the securities regulatory authority of the State Council jointly with the relevant authorities.

Article 140
Where the governance structure, compliance management, risk control indicators of a securities company do not comply with the provisions, the securities regulatory authority of the State Council shall order the securities company to make correction within a stipulated period;
where correction is not made within the stipulated period or the non-compliance has a serious impact on the steady operations of the securities company or the rights and interests of the clients, the securities regulatory authority of the State Council may adopt the following measures based on the circumstances:

(1) restrict business activities, order it to suspend some businesses, and cease approval for new businesses;

(2) restrict distribution of bonuses, and restrict payment of remuneration and provision of incentives to its directors, supervisors and senior management personnel;

(3) restrict transfer of assets, or create other rights on the assets;

(4) order the securities company to replace its directors, supervisors and senior management personnel, or impose restrictions on their rights;

(5) revoke the relevant business permit(s);

(6) blacklist accountable directors, supervisors or senior management personnel as inappropriate candidates;
and

(7) order accountable shareholders to transfer their shares or restricting accountable shareholders from exercising shareholder's rights.

Upon correction by the securities company, it shall submit a report to the securities regulatory authority of the State Council. The securities regulatory authority of the State Council shall, upon examination and acceptance, lift the relevant restrictive measure(s) stipulated in the preceding paragraph within three days from the date of examination and acceptance, if the governance structure, compliance management and risk control indicators meet the requirements.

Article 141
Where a shareholder of a securities company makes false capital contribution or withdraws capital contribution, the securities regulatory authority of the State Council shall order it to make correction within a time limit, and may order the shareholder to transfer the shareholding in the securities company.

Prior to correction of the illegal act or transfer of shareholding by the aforesaid shareholder stipulated in the preceding paragraph, the securities regulatory authority of the State Council may restrict his/her shareholder's rights.

Article 142
Where a director, supervisor or senior manager of a securities company fails to perform due diligence, causing the securities company to commit a major violation of law or regulation or be exposed to significant risks, the securities regulatory authority of the State Council may order the company to replace the director, supervisor or senior manager.

Article 143
Where a securities company commits illegal operations or is exposed to significant risks which seriously compromises securities market order and harms the interests of investors, the securities regulatory authority of the State Council may order the securities company to suspend operations for correction, appoint a receiver for the securities company or revoke the securities company etc.

Article 144
During the period where a securities company is ordered to suspend business operation for correction, placed under receivership pursuant to the law or being liquidated, or where the securities company is exposed to significant risks, upon approval by the securities regulatory authority of the State Council, the following measures may be imposed on the directors, supervisors and senior management personnel and other directly accountable personnel:

(1) inform the immigration authorities to stop such persons from leaving China;
and

(2) apply to the judicial authorities to prohibit removal or transfer of assets or disposal of assets via other means or create other rights on the assets.

Chapter 9 Securities Registration and Settlement Organisations

Article 145
Securities registration and settlement organisations provide centralised registration, custody and settlement services for securities trading, shall not be profit-orientated, and shall be registered pursuant to the law and obtain legal person status.

Establishment of securities registration and settlement organisation shall be subject to approval of the securities regulatory authority of the State Council.

Article 146
Establishment of a securities registration and settlement organisation shall satisfy the following criteria:

(1) the organisation's own funds shall not be less than RMB200 million;

(2) the organisation has the premises and facilities necessary for securities registration, custody and settlement services;
and

(3) other criteria stipulated by the securities regulatory authority of the State Council.

The wording "securities registration and settlement" shall be stated in the name of a securities registration and settlement organisation.

Article 147
Securities registration and settlement organisations shall perform the following duties:

(1) establishment of securities accounts and settlement accounts;

(2) custody and transfer of securities;

(3) registration in the register of securities holders;

(4) settlement and delivery of the securities traded;

(5) allotment of securities rights and interests of securities as entrusted by the issuer;

(6) handling queries related to the aforesaid matters, information services;
and

(7) other businesses approved by the securities regulatory authority of the State Council.

Article 148
The registration and settlement of securities traded on the stock exchanges and other nationwide securities trading venues approved by the State Council shall adopt a centralised and unified operation method across the country.

For securities other than those specified in the preceding paragraph, the registration and settlement of securities may be entrusted to a securities registration and settlement institution or other institutions that engage in securities registration and settlement business according to law.

Article 149
A securities registration and settlement organisation shall formulate articles of association and business rules pursuant to the law and submit to the securities regulatory authority of the State Council for approval. Participants of securities registration and settlement business shall comply with the business rules formulated by the securities registration and settlement organisation.

Article 150
Securities traded on a stock exchange or any other nationwide securities trading venues approved by the State Council shall be deposited with a securities registration and settlement organisation.

Securities registration and settlement organisations shall not misappropriate the securities of their clients.

Article 151
Securities registration and settlement organisations shall provide the register of securities holders and the relevant information to the securities issuer.

Securities registration and settlement organisations shall, based on the outcome of securities registration and settlement, confirm the fact of securities holding by a securities holder, and provide registration information of a securities holder.

Securities registration and settlement organisations shall ensure that the records in the register of securities holders and register of transfers are true, accurate and complete, and shall not be conceal, forge, tamper with or destroy the records.

Article 152
Securities registration and settlement organisations shall adopt the following measures to ensure normal conduct of business:

(1) implement the requisite service facilities and comprehensive data protection measures;

(2) implement proper business, financial and security management systems;
and

(3) implement a proper risk management system.

Article 153
Securities registration and settlement organisations shall keep the original certificates and the relevant documents and materials on registration, custody and settlement properly. The retention period is not less than 20 years.

Article 154
Securities registration and settlement organisations shall set up a securities settlement risk fund to be used for making advance payment or making up of losses of the securities registration and settlement organisation arising from a default on delivery, technical fault, operational malfunction or a force majeure event.

The securities settlement risk fund shall be accrued from the business revenue and gains of the securities registration and settlement organisation and may be contributed by the settlement participants in accordance with a certain percentage of the securities trading volume.

The measures on fundraising and management of the securities settlement risk fund shall be formulated by the securities regulatory authority of the State Council jointly with the finance department of the State Council.

Article 155
The securities settlement risk fund shall be deposited into a designated bank account and be subject to specific administration.

Upon making compensation using the risk fund, the securities registration and settlement organisation shall seek recourse from the party liable.

Article 156
The application for dissolution of a securities registration and settlement organisation shall be subject to approval of the securities regulatory authorities of the State Council.

Article 157
Investors entrusting a securities company to carry out securities trading shall open and maintain a securities account at a securities registration and settlement organisation through the securities company. The securities registration and settlement organisation shall open securities accounts for investors pursuant to the provisions.

Investors applying for opening of securities account shall hold legal documents proving the identity of a citizen, legal person or partnership enterprise of the People's Republic of China, unless otherwise stipulated by the State.

Article 158
Where a securities registration and settlement organisation provides securities settlement services as a central counterparty, it shall be the common clearing and settlement counterparty of the settlement participants, carry out net settlement, and provide centralised performance guarantee for securities transactions.

Securities registration and settlement organisations providing net settlement services for securities transactions shall require the settlement participants to deliver the securities and funds in full based on the principle of delivery versus payment and provide delivery guarantee.

Prior to completion of delivery, the securities, no person shall have access to the funds and collateral used for delivery.

Where a settlement participant fails to perform delivery obligations on time, the securities registration and settlement organisation shall have the right to deal with the assets referred to in the preceding paragraph in accordance with the business rules.

Article 159
Settlement funds and securities collected by the securities registration and settlement organisations in accordance with the business rules shall be deposited in designated settlement and delivery accounts, shall only be used for settlement and delivery for completed securities transactions in accordance with the business rules, and shall not be enforced.

Chapter 10 Securities Services Organisations

Article 160
Accounting firms, law firms as well as securities service organisations providing securities investment advisory, asset valuation, credit rating, financial advisory, information technology system services shall be diligent and responsible, perform their duties with dedication, and provide services pertaining to securities trading and the relevant activities in accordance with the relevant business rules.

Organisations engaging in securities investment advisory service business shall be subject to approval by the securities regulatory authority of the State Council;
without approval, they shall not provide services for securities trading and the relevant activities. Organisations engaging in other securities service businesses shall file records with the securities regulatory authority of the State Council and the relevant State Council departments.

Article 161
Investment advisory organisations and their practitioners providing securities services shall not commit the following acts:

(1) carry out securities investment for the principals;

(2) agree on sharing of investment gains or losses with the principals;

(3) purchase or sell shares of companies which use the services of the investment advisory organisation;
or

(4) engage in other activities prohibited by laws and administrative regulations.

Where any of the aforesaid acts causes the investors to suffer losses, compensation liability shall be borne pursuant to the law.

Article 162
Securities service organisations shall keep client entrustment documents properly, examine and verify materials, working drafts as well as information and materials relating to quality control, internal management and business operation;
no one shall divulge, conceal, forge, tamper with or mutilate such documents, information and materials. The aforesaid information and materials shall be retained for not less than 10 years, commencing from the date of completion of business entrustment.

Article 163
Securities service organisations producing and issuing audit reports and other assurance reports, asset valuation reports, financial advisory reports, credit rating reports or legal opinions for securities business activities such as offering, listing and trading of securities etc shall practice care and diligence to check and verify the veracity, accuracy and integrity of the contents of the documents they relied on. Where the document produced and issued by a securities service organisation contains false records, misrepresentation or major omission which causes others to suffer losses, the securities service organisation shall bear liability with the client jointly and severally, except where it can prove that it is not at fault.

Chapter 11 Securities Industry Association

Article 164
The securities industry association is a self-regulatory organisation of the securities industry and a social organisation legal person.

Securities companies shall join the securities industry association.

The authority of the securities industry association shall be the members' congress comprising all members.

Article 165
The articles of association of the securities industry association shall be formulated by the members' congress and filed with the securities regulatory authority of the State Council for records.

Article 166
The securities industry association shall perform the following duties:

(1) educate and organise the members as well as practitioners to comply with the provisions of laws and administrative regulations, organise and carry out development of securities industry creditworthiness, supervise performance of social responsibilities in the securities industry;

(2) safeguard the legal rights and interests of the members pursuant to the law, and provide feedback on proposals and requests of the members to the securities regulatory authorities;

(3) supervise members to carry out investor education and protection activities, and safeguard legitimate rights and interests of investors;

(4) formulate and implement securities industry self-regulatory rules, supervise and inspect conduct of members and their practitioners, and impose disciplinary action or other self-regulatory measures pursuant to the provisions on personnel who violate laws, administrative regulations, self-governance rules or the industry's articles of association.

(5) formulate securities industry business norms, and organise business training for practitioners;

(6) organise members to carry out research in development, operation of securities industry and the relevant contents in this regard, collect, sort and publish securities-related information, provide member services, organise industry exchange, and guide industry innovative development;

(7) mediate securities business disputes between members, between members and their clients;
and

(8) other duties provided in the articles of association of the securities industry association.

Article 167
The securities industry association shall establish a council. Members of the council shall be elected in accordance with the provisions of the articles of association.

Chapter 12 Securities Regulatory Authorities

Article 168
The securities regulatory authority of the State Council shall carry out supervision and administration of the securities market pursuant to the law, safeguard the transparency, fairness and equitableness of securities market, prevent systemic risks, protect the legitimate rights and interests of investors, and promote healthy development of the securities market.

Article 169
The securities regulatory authority of the State Council shall perform the following duties in the course of supervision and administration of the securities market:

(1) formulate the relevant rules and regulations on supervision and administration of the securities market pursuant to the law, process examination and approval, verification and registration pursuant to the law, and process filing;

(2) carry out supervision and administration on offering, listing, trading, registration, custody and settlement of securities pursuant to the law;

(3) carry out supervision and administration of the securities businesses of securities issuers, securities companies, securities service organisations, stock exchanges and securities registration and settlement organisations pursuant to the law;

(4) formulate the code of conduct pursuant to the law for securities practitioners, and supervise the implementation thereof;

(5) supervise and inspect information disclosure for offering, listing and trading of securities pursuant to the law;

(6) provide guidance and supervision for self-regulatory administration of the securities industry association pursuant to the law;

(7) monitor, prevent and deal with securities market risks pursuant to the law;

(8) carry out investor education pursuant to the law;

(9) investigate and deal with securities violations pursuant to the law;
and

(10) perform any other duties stipulated by the laws and administrative regulations.

Article 170
The securities regulatory authority of the State Council shall perform its duties pursuant to the law and shall have the right to adopt the following measures:

(1) conduct onsite inspection of securities issuers, securities companies, securities service organisations, stock exchanges and securities registration and settlement organisations;

(2) enter the premises where the alleged illegal act took place, to investigate and collect evidence;

(3) question the party(ies) concerned and organisation(s) and individual(s) related to the investigation matter, and request them to provide relevant information on the investigation matter;
or request them to submit documents and materials in relation to the investigation matter in accordance with the designated method;

(4) inspect and make copies of documents and materials related to the investigation matter such as property right registration and correspondence records;

(5) inspect and make copies of securities trading records, transfer registration records, financial accounting materials and other relevant documents and materials of the party(ies) concerned and organisation(s) and individual(s) related to the investigation matter;

and may seal up documents and materials which could be removed, concealed or destroyed;

(6) investigate the fund accounts, securities accounts and bank accounts of the party(ies) concerned and organisation(s) and individual(s) related to the investigation matter;
where there is evidence that the illegal funds or securities involved in the investigation matter have been or could be removed or concealed or there is sign of concealment, forgery or destruction of important evidence, such illegal funds or securities or important evidence may be frozen or seized with

approval of the person-in-charge of the securities regulatory authority of the State Council for six months;
where the period needs to be extended due to special reason, each extension shall not exceed three months, and the maximum period for freezing or sealing of evidence shall not exceed two years;

(7) during the investigation of major securities violations such as manipulation of securities market or insider trading etc, the securities transactions of the party under investigation may be restricted with approval of the person-in-charge of the securities regulatory authority of the State Council, however the restriction period shall not exceed three months;
where the case is complicated, the restriction period may be extended by three months.

(8) notify the immigration administrative authorities to prevent suspected offenders, persons-in-charge of suspected offending and other directly accountable personnel from leaving China pursuant to the law.

For the purposes of preventing securities market risks, safeguard market order, the securities regulatory authority of the State Council may take measures such as ordering to make correction, holding a regulatory talk, issuing a letter of warning etc.

Article 171
During the period when the securities regulatory authority of the State Council investigates into an organisation or individual suspected of committing a securities violation, where the party under investigation applies in writing and undertakes to rectify the alleged violation within a period agreed by the securities regulatory authority of the State Council, compensate the losses of the relevant investors, and eliminate the damages or adverse consequences, the securities regulatory authority of the State Council may decide to suspend the investigation. Where the investigated party performs the undertaking, the securities regulatory authority of the State Council may decide to terminate investigation;
where the party under investigation fails to perform the undertaking or falls under other circumstances stipulated by the State Council, investigation shall be resumed. Detailed measures shall be stipulated by the State Council.

Where the securities regulatory authority of the State Council decides to suspend or terminate an investigation, it shall disclose relevant information in accordance with regulations.

Article 172
The securities regulatory authority of the State Council shall carry out supervision, inspection or investigation pursuant to the law;
the number of supervision, inspection and investigation personnel shall not be less than two persons;
they shall present their legal credentials and the notice of supervision, inspection or investigation or other law enforcement documents. Where there are less than two personnel assigned for supervision, inspection or investigation or where they fail to produce their credentials and the notice of supervision, inspection or investigation or other law enforcement documents, the organisation subject to inspection or investigation shall have the right to refuse inspection or investigation.

Article 173
The securities regulatory authority of the State Council shall perform their duties pursuant to the law, and the organisations and individuals subject to inspection or investigation shall cooperate and provide the relevant documents and information truthfully, and shall not refuse to do so, or commit obstruction or concealment.

Article 174
The rules, regulations and regulatory work systems formulated by the securities regulatory authority of the State Council shall be made public pursuant to the law.

The securities regulatory authority of the State Council shall, based on the investigation results, make public its punishment decision on securities illegal acts.

Article 175
The securities regulatory authority of the State Council shall establish a regulatory information sharing mechanism with the other financial regulatory authorities of the State Council.

When the securities regulatory authority of the State Council carries out supervision, inspection or investigation pursuant to the law, the relevant departments shall cooperate.

Article 176
Any organisation or individual shall have the right to report an alleged securities violation to the securities regulatory authority of the State Council.

Where a real-name report or lead for an alleged serious illegal act or violation is verified and found to be true, the securities regulatory authority of the State Council shall reward the person who submits the report or lead pursuant to the provisions.

The securities regulatory authority of the State Council shall keep confidentiality of the identity information of persons who submit a report or a lead.

Article 177
The securities regulatory authority of the State Council may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region, to implement cross-border supervision and administration.

Overseas securities regulatory authorities shall not carry out investigation and evidence collection etc. directly in the People's Republic of China. Without the consent of the securities regulatory authority of the State Council and the relevant State Council department(s), no organisation or individual may provide the documents and materials relating to securities business activities to overseas parties arbitrarily.

Article 178
Where the securities regulatory authority of the State Council discovers during performance of duties pursuant to the law, that a securities violation is suspected of a crime, it shall forward the case to the judicial authorities for handling;
where a civil servant is suspected of violating the law or committing a crime in his/her work, it shall refer the case to the supervisory authorities for handling.

Article 179
Civil servants of the securities regulatory authority of the State Council shall act with loyalty and in accordance with the law, be impartial and incorruptible, and shall not make use of official powers to seek improper gains, and shall not divulge commercial secrets of the relevant organisations and individuals which have come into their knowledge.

Civil servants of the securities regulatory authority of the State Council shall not, during their term of office or within the post-appointment period stipulated in the Civil Servants Law of the People's Republic of China, be employed by an enterprise or any other profit-oriented organisation which relates directly to their former work, and shall not engage in profit-oriented activities which relate directly to their former work.

Chapter 13 Legal Liability

Article 180
Issuers making a public offering of securities arbitrarily or in disguise which violate the provisions of Article 9 of this Law shall be ordered to stop the offering and return the proceeds plus interest on bank deposits for the same period, and be subject to a fine ranging from 1% to 5% of the amount of the illegally raised proceeds;
Companies which make a public offering of securities arbitrarily or in disguise shall be closed down by the relevant supervision and administration authorities and the local people's government of county level or above. The person-in-charge and other personnel who are directly accountable shall be issued a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously.

Article 181
Where an issuer conceals important facts or fabricates significant false contents in its announced securities offering documents, if the securities are yet to be issued, it shall be subject to a fine ranging from RMB2 million to RMB20 million;
where the securities are issued, it shall be subject to a fine ranging from 10% to 100% of the illegally raised funds. The directly accountable person(s)-in-charge and other directly accountable personnel shall be subject to a fine ranging from RMB1 million to RMB10 million.

Where the controlling shareholder(s) or actual controlling party of the issuer organises and instigates the illegal act stipulated in the preceding paragraph, illegal income shall be confiscated and a fine ranging from 10% to 100% of the illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB20 million, a fine ranging from RMB2 million to RMB20 million shall be imposed. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning shall be subject to a fine ranging from RMB1 million to RMB10 million.

Article 182
Where a sponsor issues a sponsor letter which contains false records, misrepresentation or major omission, or does not perform other statutory duties, it shall be ordered to make correction and given a warning, the business income shall be confiscated, and a fine ranging from one time to 10 times the business income shall be imposed simultaneously;
where there is no business income or the amount of business income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed;
in serious cases, the sponsor business permit shall be suspended or revoked simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously.

Article 183
Where a securities company underwrites or sells securities issued arbitrarily in a public offering directly or under any pretext, it shall be ordered to stop underwriting or selling, illegal income shall be confiscated, and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed;
in serious cases, the relevant business permit shall be suspended or revoked simultaneously. Where the investors suffer losses as a result thereof, the securities company shall bear compensation liability jointly and severally with the issuer. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously.

Article 184
Where a securities company underwrites securities in violation of the provisions of Article 29 of this Law, it shall be ordered to make correction, given a warning, illegal income shall be confiscated and a fine ranging from RMB500,000 to RMB5 million may be imposed simultaneously;

in serious cases, the relevant business permit shall be suspended or revoked. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and may be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously;
in serious cases, a fine ranging from RMB500,000 to RMB5 million may be imposed simultaneously.

Article 185
Where an issuer violates the provisions of Article 14 and Article 15 of this Law in arbitrarily changing the usage purpose for proceeds from the public offering of securities, it shall be ordered to make correction and be subject to a fine ranging from RMB500,000 to RMB5 million;
the directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously.

Where the controlling shareholder(s) or actual controlling party of the issuer engages in or organises or instigates the illegal act stipulated in the preceding paragraph, they shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously;

the directly accountable person(s)-in-charge and other directly accountable personnel shall be subject to a fine ranging from RMB100,000 to RMB1 million.

Article 186
Persons who violate the provisions of Article 36 of this Law in transferring securities within the moratorium period, or whose share transfer does not comply with laws, administrative regulations and the provisions of the securities regulatory authority of the State Council shall be ordered to make correction, be given a warning, illegal income shall be confiscated, and a fine of less than the equivalent value of the securities purchased or sold shall be imposed simultaneously.

Article 187
Where a person prohibited by laws, administrative regulations from participating in share trading violates the provisions of Article 40 of this Law in holding, purchasing and selling shares or other securities of equity nature directly or using a pseudonym or in other's name, he/she shall be ordered to dispose of the illegally held shares or securities of equity nature pursuant to the law, illegal income shall be confiscated and be subject to a fine of less than the equivalent value of the securities purchased or sold simultaneously;
where the person is a civil servant, he/she shall also be punished pursuant to the law.

Article 188
Securities service organisations and their practitioners purchasing and selling securities in violation of the provisions of Article 42 of this Law shall be ordered to dispose of the illegally held securities pursuant to the law, illegal income shall be confiscated and a fine of less than the equivalent value of the securities purchased or sold shall be imposed simultaneously.

Article 189
Where the directors, supervisors, senior management personnel of a listed company or a company whose shares are traded on a nationwide securities trading venue approved by the State Council, as well as shareholders holding more than 5% of the said company, violate the provisions of Article 44 of this Law in purchasing or selling the shares or other securities of equity nature of the said company, they shall be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously.

Article 190
Persons who violate the provisions of Article 45 of this Law in adopting program trading to affect the stock exchange's system security or the order of normal trading shall be ordered to make correction and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously.

Article 191
Persons privy to insider information of securities trading or persons who obtained insider information illegally who violate the provisions of Article 53 of this Law in engaging in insider trading shall be ordered to dispose of the illegally held securities pursuant to the law, illegal income shall be confiscated, and they shall be subject to a fine ranging from one time to 10 times the amount of illegal income simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed. Where an organisation engages in insider trading, the directly accountable person(s)-in-charge and other directly accountable personnel shall also be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously. Civil servants of the securities regulatory authority of the State Council who engage in insider trading shall be subject to heftier punishment.

Persons who violate the provisions of Article 54 of this Law in making use of undisclosed information for trading shall be punished pursuant to the provisions of the preceding paragraph.

Article 192
Persons who violate the provisions of Article 55 of this Law in manipulating the securities market shall be ordered to dispose of the illegally held securities pursuant to the law, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed. Where an organisation manipulates the securities market, the directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously.

Article 193
For persons who violate the provisions of the first paragraph and the third paragraph of Article 56 of this Law in fabricating and disseminating false information or misleading information to disrupt the securities market, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB200,000, a fine ranging from RMB200,000 to RMB2 million shall be imposed.

Persons who violate the provisions of the second paragraph of Article 56 of this Law in making false or misrepresentation in securities trading shall be ordered to make correction and be subject to a fine ranging from RMB200,000 to RMB2 million;
civil servants who commit such offence shall also be punished pursuant to the law.

Where a mass media and its staff engaging in the reporting of securities market information violate the provisions of the third paragraph of Article 56 of this Law to engage in the sale and purchase of securities that conflict with their job responsibilities, the illegal income shall be confiscated and a fine of less than the equivalent value of securities purchased and sold shall be imposed simultaneously.

Article 194
Securities companies and their practitioners that violate Article 57 of this Law and harm the interests of their clients shall be given a warning, the illegal income shall be confiscated, and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB100,000, a fine ranging from RMB100,000 to RMB1 million shall be imposed;
in serious cases, the relevant business permit shall be suspended or revoked.

Article 195
Persons who violate the provisions of Article 58 of this Law in lending their securities account or making use of other's securities account to trade in securities shall be ordered to make correction, be given a warning, and may be subject to a fine of less than RMB500,000.

Article 196
Where an acquirer does not perform the obligations of announcing takeover of listed company, making of takeover offer pursuant to the provisions of this Law, it shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Where an acquirer and its controlling shareholders, actual controlling party make use of acquisition of listed company to cause the target company and its shareholders to suffer losses, compensation liability shall be borne pursuant to the law.

Article 197
Information disclosure obligors who do not submit the relevant reports or perform information disclosure obligations pursuant to the provisions of this Law shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously;
the directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously. Where the controlling shareholder(s) or actual controlling party of an

issuer organises or instigates the aforesaid illegal act, or conceal the relevant matter and causes the aforesaid circumstances to occur, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
the directly accountable person(s)-in-charge and other directly accountable personnel shall be subject to a fine ranging from RMB200,000 to RMB2 million.

Information disclosure obligors submitting reports or disclosing information which contain false records, misrepresentation or major omission shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB1 million to RMB10 million simultaneously;
the directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously. Where the controlling shareholder(s) or actual controlling party of an issuer organises or instigates the aforesaid illegal act or conceal the relevant matter and causes the aforesaid circumstances to occur, a fine ranging from RMB1 million to RMB10 million shall be imposed;
the directly accountable person(s)-in-charge and other directly accountable personnel shall be subject to a fine ranging from RMB500,000 to RMB5 million.

Article 198
Where a securities company violates the provisions of Article 88 of this Law in non-performance of investor suitability management obligations or failing to perform investor suitability management obligations pursuant to the provisions, it shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine of less than RMB200,000 simultaneously.

Article 199
Persons who violate the provisions of Article 90 of this Law in collecting shareholder's rights shall be ordered to make correction, be given a warning and may be subject to a fine of less than RMB500,000.

Article 200
Any illegally established securities trading venue will be closed down by a People's Government of county level or above, illegal income will be confiscated and a fine ranging from one time to 10 times the amount of illegal income will be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million will be imposed.

The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Where a stock exchange violates the provisions of Article 105 of this Law in allowing non-members to participate directly in centralised trading of shares, it shall be ordered to make correction and may be subject to a fine of less than RMB500,000 simultaneously.

Article 201
Where a securities company violates the provisions of the first paragraph of Article 107 of this Law in failing to verify identity information provided by investors for account opening, it shall be

ordered to make correction, be given a warning and be subject to a fine ranging from RMB50,000 to RMB500,000 simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine of less than RMB100,000 simultaneously.

Where a securities company violates the provisions of the second paragraph of Article 107 of this Law in providing an investor account to others for use shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine of less than RMB200,000 simultaneously.

Article 202
Persons who violate the provisions of the first paragraph of Article 118, the fourth paragraph of Article 120 of this Law in establishing a securities company arbitrarily, operating securities business illegally or carrying out securities business activities in the name of a securities company without approval shall be ordered to make correction, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million. Securities companies established arbitrarily shall be closed down by the securities regulatory authorities of the State Council.

Where a securities company violates the provisions of the fifth paragraph of Article 120 of this Law in providing securities margin trading and short-selling services, its illegal income shall be confiscated and a fine of less than the equivalent value of margin trading and short-selling shall be imposed simultaneously;
where the case is serious, the securities company shall be banned from securities margin trading and short-selling within a certain period. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 203
Where the establishment permit, business permit or approval for change in significant event of a securities company is obtained by providing false proof documents or adopting other fraudulent means, the relevant permit shall be revoked and a fine ranging from RMB1 million to RMB10 million shall be imposed simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 204
Where a securities company violates the provisions of Article 122 of this Law in change of scope of securities business, change of key shareholders or actual controlling party, merger, division, closure, dissolution or bankruptcy without approval, it shall be ordered to make correction and be given a warning, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
in serious cases, the relevant business permit shall also be revoked simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 205
Where a securities company violates the provisions of the second paragraph of Article 123 of this Law in providing financing or guarantee for its shareholders or a shareholder's related party, it shall be ordered to make correction, be given a warning, and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously. Where the shareholder is at fault and has yet to make correction as required, the securities regulatory authority of the State Council may restrict its shareholder's rights;
where the shareholder refuses to make correction, it may be ordered to transfer its shareholding in the securities company.

Article 206
Where a securities company violates the provisions of Article 128 of this Law in failing to adopt effective isolation measures to prevent conflict of interests, or failing to separate the relevant businesses or mix the operation, it shall be ordered to make correction and be given a warning, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
in serious cases, the relevant business permit shall also be revoked. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 207
Where a securities company violates the provisions of Article 129 of this Law in carrying out proprietary

securities business, it shall be ordered to make correction and be given a warning, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
in serious cases, the relevant business permit shall also be revoked or the securities company shall be ordered to close down simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 208
Where a securities company violates the provisions of Article 131 of this Law in including funds and securities of its clients into its own assets or misappropriation of funds and securities of its clients, it shall be ordered to make correction and be given a warning, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed;
in serious cases, the relevant business permit shall also be revoked or the securities company shall be ordered to close down simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB500,000 to RMB5 million simultaneously.

Article 209
Where a securities company violates the provisions of the first paragraph of Article 134 of this Law in accepting discretionary orders from clients for purchasing and selling of securities, or violates the provisions of Article 135 of this Law in giving undertaking of gains or compensation of losses to clients, it shall be ordered to make correction and be given a warning, illegal income shall be confiscated and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
in serious cases, the relevant business permit shall be revoked simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Where a securities company violates the provisions of the second paragraph of Article 134 of this Law in allowing others to participate directly in centralised trading of securities in the name of the securities company, it shall be ordered to make correction and may be subject to a fine of less than RMB500,000 simultaneously.

Article 210
Practitioners of securities companies who violate the provisions of Article 136 of this Law in accepting entrustment from clients privately to purchase and sell securities shall be ordered to make correction and be given a warning, the illegal income shall be confiscated, and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income, a fine of less than RMB500,000 shall be imposed.

Article 211
Where a securities company as well as its key shareholders and actual controlling party violate the provisions of Article 138 of this Law in failing to submit or provide information and materials, or submitting or providing the information and materials which contain false records, misrepresentation or major omission, they shall be ordered to make correction, be given a warning and be subject to a fine of less than RMB1 million simultaneously;
in serious cases, the relevant business permit shall be revoked simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine of less than RMB500,000 simultaneously.

Article 212
Securities registration and settlement organisations established arbitrarily in violation of the provisions of Article 145 of this Law shall be closed down by the securities regulatory authorities of the State Council, illegal income shall be confiscated, and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 213
Securities investment advisory organisations which violate the provisions of the second paragraph of Article 160 of this Law in carrying out securities service business arbitrarily, or commit an act stipulated in Article 161 of this Law when engaging in securities service business shall be ordered to make correction, the illegal income shall be confiscated, and a fine ranging from one time to 10 times the amount of illegal income shall be imposed simultaneously;
where there is no illegal income or the amount of illegal income is less than RMB500,000, and a fine ranging from RMB500,000 to RMB5 million shall be imposed. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Where accounting firms and law firms, as well as organisations providing asset valuation, credit rating, financial advisory and information technology services, violate the provisions of the second paragraph of Article 160 of this Law in carrying out securities service business without completing filing formalities, they shall be ordered to make correction and may be subject to a fine of less than RMB200,000.

Where securities service organisations violate the provisions of Article 163 of this Law in failing to act responsibly and diligently, producing and issuing documents which contain false records, misrepresentation or major omission, they shall be ordered to make correction, business income shall be confiscated, and a fine ranging from one time to 10 times the amount of business income shall be imposed simultaneously;
where there is no business income or the amount of business income is less than RMB500,000, a fine ranging from RMB500,000 to RMB5 million shall be imposed;
in serious cases, the securities service business of the securities service organisation shall be suspended or prohibited simultaneously. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously.

Article 214
Issuers, securities registration and settlement organisations, securities companies, securities service organisations which fail to retain the relevant documents and materials pursuant to the provisions shall be ordered to make correction, be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously;
such entities guilty of divulging, concealing, forging, tampering with or mutilating the relevant documents and materials shall be given a warning and be subject to a fine ranging from RMB200,000 to RMB2 million simultaneously;
in serious cases, a fine ranging from RMB500,000 to RMB5 million shall be imposed, and simultaneously the relevant business permit shall be suspended or revoked, or the entity shall be prohibited from engaging in the relevant business. The directly accountable person(s)-in-charge and other directly accountable personnel shall be given a warning and be subject to a fine ranging from RMB100,000 to RMB1 million simultaneously.

Article 215
The securities regulatory authority of the State Council shall, pursuant to the law, include information on compliance with this Law by the relevant market entities in the securities market creditworthiness files.

Article 216
Where the securities regulatory authority of the State Council or the authorities empowered by the State Council commit any of the following acts, the directly accountable person(s)-in-charge and other directly accountable personnel shall be punished pursuant to the law:

(1) granting authorisation, registration or approval for applications for offering of securities or establishment of securities company which do not comply with the provisions of this Law;

(2) imposing measures such as onsite inspection, investigation and evidence collection, enquiry, freezing or seizure etc. in violation of the provisions of this Law;

(3) imposing regulatory measures on the relevant organisations and personnel in violation of the provisions of this Law;

(4) implementing administrative punishment on the relevant organisations and personnel in violation of the provisions of this Law;
or

(5) other acts of non-performance of job duties pursuant to the law.

Article 217
Where the civil servants of the securities regulatory authority of the State Council or the authorities empowered by the State Council are guilty of non-performance of duties stipulated in this Law, abusing official powers and dereliction of duties, making use of official capacity to seek improper gains, or divulging commercial secrets of the relevant organisations and individuals which have come into their knowledge, their legal liability shall be pursued in accordance with the law.

Article 218
For refusing or obstructing supervision and inspection, investigation carried out pursuant to the law by the securities regulatory authorities and their civil servants, the securities regulatory authorities shall order offenders to make correction and impose a fine ranging from RMB100,000 to RMB1 million, and the public security authorities shall impose security punishment pursuant to the law.

Article 219
Where a violation of the provisions of this Law constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

Article 220
Offenders of the provisions of this Law shall bear civil compensation liability and pay fines and penalties, and hand over the illegal income;
where the assets of the offenders are inadequate for payment, the assets shall first be used for fulfilling civil compensation liability.

Article 221
For violation of laws, administrative regulations or the relevant provisions of the securities regulatory authority of the State Council, if the case is serious, the securities regulatory authority of the State Council may ban the relevant accountable personnel from entering the securities market.

"Ban from securities market" referred to in the preceding paragraph shall mean a system which prohibits a person from engaging in securities business and securities service business for a certain period of time or permanently, or prohibits a person from serving as director, supervisor or senior management personnel of an issuer, or prohibits a person from trading securities on a stock exchange or any other nationwide securities trading venues approved by the State Council for a certain period of time.

Article 222
Fines collected and illegal income confiscated pursuant to this law shall be turned over fully to the State Treasury.

Article 223
A party concerned which disagrees with the punishment decision of the securities regulatory authorities or the authorities empowered by the State Council may apply for administrative review pursuant to the law or file a lawsuit directly with a People's Court pursuant to the law.

Chapter 14 Supplementary Provisions

Article 224
Domestic enterprises issuing securities overseas directly or indirectly or listing their securities overseas shall comply with the relevant provisions of the State Council.

Article 225
For subscription and trading of shares of domestic companies using foreign currencies, detailed measures shall be stipulated by the State Council separately.

Article 226
This Law shall be implemented with effect from 1 March 2020.