BIZCHINA / Finance
Securities Law of the People's Republic of China (revised in 2005)
Updated: 2006-04-18 08:56
(Adopted at the 6th Meeting of the Standing Committee of the 9th National
People's Congress on December 29, 1998, revised at the 18th Meeting of
the Standing Committee of the Tenth National People's Congress of the
People's Republic of China on October 27, 2005 according to the Decision
on Revising the Securities Law of the People's Republic of China as made
at the 11th meeting of the Standing Committee of the 10th People's
Congress on August 28, 2004)
Chapter I General Provisions
Article 1 The present Law is formulated for the purpose of regulating the
issuance and transaction of securities, protecting the lawful rights and
interests of investors, safeguarding the economic order and public
interests of the society and promoting the growth of the socialist market
economy.
Article 2 The present Law shall be applied to the issuance and
transaction of stocks, corporate bonds as well as any other securities as
lawfully recognized by the State Council within the territory of the
People's Republic of China. Where there is no such provision in the
present Law, the provisions of the Corporation Law of the People's
Republic of China and other relevant laws and administrative regulations
shall be applied. Any listed trading of government bonds and share of
securities investment funds shall be governed by the present Law. Where
there is any special provision in any other law or administrative
regulation, the special provision shall prevail. The measures for the
administration of issuance and transaction of securities derivatives
shall be prescribed by the State Council according to the principles of
the present Law.
Article 3 The issuance and transaction of securities shall adhere to the
principles of openness, fairness and impartiality.
Article 4 The parties involved in any issuance or transaction of
securities shall have equal legal status and shall persist in the
principles of free will, compensation and integrity and creditworthy.
Article 5 The issuance and transaction of securities shall observe laws
and administrative regulations. No fraud, insider trading or manipulation
of the securities market may be permitted.
Article 6 The divided operation and management shall be adopted by the
industries of securities, banking, trust as well as insurance. The
securities companies and the business organs of banks, trust and
insurance shall be established separately, unless otherwise provided for
by the state.
Article 7 The securities regulatory authority under the State Council
shall adopt a centralized and unified supervision and administration of
the national securities market. The securities regulatory authority under
the State Council may, in light of the relevant requirements, establish
dispatched offices, which shall perform their duties and functions of
supervision and administration upon the authorization.
Article 8 Under the centralized and unified supervision and
administration of the state regarding the issuance and transaction of
securities, a securities industrial association shall be lawfully
established, which shall adopt the self-regulating administration.
Article 9 The auditing organ of the state shall carry out auditing
supervision of stock exchanges, securities companies, securities
registration and clearing institutions and securities regulatory bodies.
Chapter II Issuance of Securities
Article 10 A public issuance of securities shall satisfy the requirements
of the relevant laws and administrative regulations and shall be reported
to the securities regulatory authority under the State Council or a
department upon authorization by the State Council for examination and
approval according to law. Without any examination and approval according
to law, no entity or individual may make a public issuance of any
securities. It shall be deemed as a public issuance upon the occurrence
of any of the following circumstances:
(1) Making a public issuance of securities to non-specified objects;
(2) Making a public issuance of securities to accumulatively more than
200 specified objects; or
(3) Making a public issuance as prescribed by any law or administrative
regulation. For any securities that are not issued in a public manner,
the means of advertising, public inducement or public issuance in any
disguised form may not be adopted thereto.
Article 11 An issuer that files an application for public issuance of
stocks or convertible corporate bonds by means of underwriting according
to law or for public issuance of any other securities, to which a
recommendation system is applied, as is prescribed by laws and
administrative regulations, shall employ an institution with the
qualification of recommendation as its recommendation party. A
recommendation party shall abide by operational rules and industrial
norms and, on the basis of the principles of being honesty, creditworthy,
diligent and accountable, carry out a prudent examination of application
documents and information disclosure materials of its issuers as well as
supervise and urge its issuers to operate in a regulative manner. The
qualification of the recommendation party as well as the relevant
measures for administration shall be formulated by the securities
regulatory authority under the State Council.
Article 12 A public offer of stocks for establishing a stock-limited
company shall satisfy the requirements as prescribed in the Corporation
Law of the People's Republic of China as well as any other requirements
as prescribed by the securities regulatory authority under the State
Council, which have been approved by the State Council. An application
for public offer of stocks as well as the following documents shall be
reported to the securities regulatory authority under the State Council:
(1) The constitution of the company;
(2) The promoter's agreement;
(3) The name or title of the promoter, the amount of shares as
subscribed by the promoter, the category of contributed capital as well
as the capital verification certification;
(4) The prospectus;
(5) The name and address of the bank that receives the funds as
generated from the issuance of stocks on the behalf of the company; and
(6) The name of the underwriting organization as well as the relevant
agreements. In case a recommendation party shall be employed, as
prescribed by the present Law, the Recommendation Letter of Issuance as
produced by the recommendation party shall be submitted as well. In case
the establishment of a company shall be reported for approval, as
prescribed by laws and administrative regulations, the relevant approval
documents shall be submitted as well.
Article 13 An initial public offer (IPO) of stocks of a company shall
satisfy the following requirements:
(1) Having a complete and well-operated organization;
(2) Having the capability of making profits successively and a sound
financial status;
(3) Having no false record in its financial statements over the latest 3
years and having no other major irregularity; and
(4) Meeting any other requirements as prescribed by the securities
regulatory authority under the State Council, which has been approved by
the State Council. A listed company that makes any initial non-public
offer of stocks shall satisfy the requirements as prescribed by the
securities regulatory authority under the State Council, which have been
approved by the State Council and shall be reported to the securities
regulatory authority under the State Council for examination and approval.
Article 14 A company that makes an IPO of stocks shall apply for public
offer of stocks as well as the following documents to the securities
regulatory authority under the State Council:
(1) The business license of the company;
(2) The constitution of the company;
(3) The resolution of the general assemble of shareholders;
(4) The prospectus;
(5) The financial statements;
(6) The name and address of the bank that receives the funds as
generated from the public offer of stocks on the behalf of the company;
and
(7) The name of the underwriting institution as well as the relevant
agreements. In case a recommendation party shall be employed, as
prescribed by the present Law, the Recommendation Letter of Issuance as
produced by the recommendation party shall be submitted as well.
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