Securities Law of the People's Republic of China

Adopted at the 6th Meeting of the Standing Committee of the 9th National People's Congress on December 29, 1998 and promulgated by Order [1998] No. 12 of the President of the People's Republic of China

Chapter I General Provisions
Article 1 This Law is enacted for purposes of standardizing acts of securities issuance and trading, protecting the legitimate rights and interests of investors, maintaining socioeconomic order and public interest of society and promoting the development of the socialist market economy.
Article 2 This Law shall be applicable to the issuance and trading of stocks, corporate bonds and other securities confirmed by the State Council according to law within the territory of China. Where there are no provisions in this Law, provisions of the Company Law, and other laws and regulations shall be applicable.
Issuance and trading of government bonds shall be prescribed by law or administrative regulations separately.
Article 3 The principle of openness, fairness and justice must be practised in operations of securities issuance and trading.
Article 4 Parties interested in operations of securities issuance and trading have equal legal status and should abide by the principle of voluntariness, compensation, honesty and trustworthiness.
Article 5 Operations of securities issuance and trading must abide by laws and administrative regulations; acts of fraud, inside trading and manipulation of securities trading markets shall be prohibited.
Article 6 The securities industry and banking industry, trust business and insurance industry shall be put under separate industry-wise management and separate industry-wise administration. Security companies and banking, trust and insurance business institutions shall be established separately.
Article 7 The securities supervision and administration institution under the State Council practises centralized and unified supervision and administration of securities markets nationwide.
The securities supervision and administration institution under the State Council may establish representative offices which shall fulfil the duties and responsibilities authorized.
Article 8 Securities industry associations established according to law shall practise self-policing administration under the prerequisite of the exercise by the state of centralized and unified supervision and administration over operations of securities issuance and trading.
Article 9 State audit organs shall conduct audit supervision according to law over securities exchanges, security companies, securities registration and settlement agencies and securities supervision and administration institutions.

Chapter II Securities Issuance
Article 10 Public issuance of securities must conform to the criteria prescribed by laws and administrative regulations, and be submitted to the securities supervision and administration institution under the State Council or the departments authorized by the State Council according to law for verification and approval or examination and approval; no unit or individual shall, without verification and approval or examination and approval according to law, publicly issue securities in society.
Article 11 Public issuance of stocks must, pursuant to the conditions prescribed in the Company Law, be submitted to the securities supervision and administration institution under the State Council for verification and approval. The issuer must present the application document prescribed by the Company Law and the relevant documents prescribed by the securities supervision and administration institution under the State Council to the securities supervision and administration institution under the State Council.
Issuance of corporate bonds must, pursuant to the criteria prescribed in the Company Law, be submitted to the department authorized by the State Council for examination and approval. The issuer must present the application document prescribed by the Company Law and other documents prescribed by the department authorized by the State Council to the department authorized by the State Council.
Article 12 The format and ways of submission of the application document to be presented by the issuer for application for public issuance of securities according to law shall be prescribed by the institution or department responsible for verification and approval or examination and approval according to law.
Article 13 The application document for securities issuance to be presented by the issuer to the securities supervision and administration institution under the State Council or the department authorized by the State Council must be truthful, accurate and complete.
The specialized agencies and personnel for drawing up relevant documents for securities issuance must strictly fulfil the legal duties and responsibilities to ensure the truthfulness, accuracy and completeness of the documents drawn up by them.
Article 14 An issuance examination and verification commission shall be established under the securities supervision and administration institution under the State Council for examination and verification of applications for issuance of stocks in accordance with law. The issuance examination and verification commission shall be composed of specialized personnel of the securities supervision and administration institution under the State Council and specialists concerned employed from outside the said institution and come up with views on examination and verification and decide by vote on applications for stock issuance in the form of ballot.
Specific measures for the composition, tenure of office for its members and the working procedures of the issuance examination and verification commission shall be formulated by the securities supervision and administration institution under the State Council and submitted to the State Council for approval.
Article 15 The securities supervision and administration institution under the State Council shall, pursuant to legal conditions, be responsible for the verification and approval of applications for stock issuance. The procedures for verification and approval shall be open and be subject to supervision in accordance with law.
Personnel participating in the verification and approval of applications for stock issuance shall not have relations of interests with issuance application units; shall not accept present(s) of issuance application unit(s); shall not hold stocks the issuance application of which has been approved; and shall not come into contact with issuance application unit(s)in private.
Examination and approval of applications for issuance of corporate bonds by the departments authorized by the State Council shall be processed by referring to the provisions of the two preceding paragraphs.
Article 16 The securities supervision and administration institution under the State Council or the departments authorized by the State Council should, within 3 months starting from the date of acceptance of securities issuance application documents, make a decision; explanations shall be made for non-approval or non examination and approval.
Article 17 An issuer shall, with the approval or examination and approval of the securities issuance application, make an announcement of the document on public issuance and raising and place the said document at designated site(s) for public reference prior to the public issuance of the securities pursuant to the provisions of laws and administrative regulations.
Prior to the information on securities issuance being made public in accordance with law, no insider shall make public or disclose the said information.
No issuer shall issue securities prior to the announcement of the document on public issuance and raising.
Article 18 The securities supervision and administration institution under the State Council or the departments authorized by the State Council shall, upon discovery of the decision already made on the approval or examination and approval of securities issuance to be not in conformity with the provisions of laws and administrative regulations, revoke the said decision; where issuance of securities has not been initiated, the issuance shall be suspended; where the securities have already been issued, the securities holders may, in accordance with the issuing price with the added calculation of interests for deposit of the corresponding period, ask the issuer for refund.
Article 19 The issuer shall be responsible for himself/herself for changes in the management and returns of the issuer after issuance of the stocks in accordance with law; the investors shall be responsible for himself/herself for investment risks resulting from the changes.
Article 20 New stocks issued by a listed company should conform to the conditions governing issuance of new stocks specified in the Company Law, and may be raised in public in society, or allocated to original stock-holders.
Funds raised by a listed company from stock issuance must be used according to the uses of the funds listed in the prospectus. Change in fund uses listed in the prospectus must be subject to the approval of the general meeting of shareholders. Where arbitrary change in use without rectification has occurred, or the change has taken place without affirmation of the general meeting of shareholders, no new stocks shall be issued.
Article 21 Security companies should, pursuant to the provisions of laws and administrative regulations, sell issuers' securities for public issuance in society. Securities sales business take the form of sale on a commission basis or exclusive sales.
Sale on a commission basis of securities mean the form of underwriting of selling of securities by security companies for issuers and returning all the unsold securities to issuers at the conclusion of the selling period.
Exclusive sales of securities mean the form of underwriting of total buying in of issuers' securities by security companies or total buying in of the securities left over after sales by security companies themselves at the conclusion of the selling period in accordance with agreement.
Article 22 An issuer of securities for public issuance has the right to choose independently an underwriting security company in accordance with law. No security company shall solicit business of underwriting by means of unfair competition.
Article 23 A security company shall, in business of underwriting, conclude an agreement on the sale on a commission basis or exclusive sales with the issuer carrying the following particulars:
(1) names and residences of the parties interested and names of legal representatives;
(2) types, quantity, amount and issuing price of the securities for sale on a commission basis or exclusive sales;
(3) duration for sale on a commission basis or exclusive sales and dates of commencement and termination;
(4) mode of payment and dates for sale on a commission basis or exclusive sales;
(5) charges and settlement measures for sale on a commission basis or exclusive sales;
(6) liability for breach of contract; and
(7) other matters prescribed by the securities supervision and administration institution under the State Council.
Article 24 A security company shall, in business of underwriting, check and verify the truthfulness, accuracy and completeness of the document for public issuance and raising; no sales operations shall be carried out upon uncovering of the document containing false recordings, misleading statements or having major omissions; where sales have been under way, the sales operations must be suspended forthwith and correction measures shall be taken.
Article 25 Underwriting of securities for public issuance in society the total face value of which exceeds RMB 50 million Yuan shall be undertaken by an underwriting syndicate. The underwriting syndicate shall be composed of the leading underwriting security company and participating underwriting security companies.
Article 26 The longest duration for sale on a commission basis or exclusive sales of securities shall not exceed 90 days.
A security company shall, within the duration of sale on a commission basis or exclusive sales, ensure that the securities it has undertaken for sale on a commission basis or exclusive sales are first sold to the subscribers, and the security company shall not retain in advance the securities the sale on a commission basis of which has been undertaken by the company and buy in beforehand and retain the securities undertaken by the company for exclusive sales.
Article 27 A security company that undertakes exclusive sales of securities shall, within 15 days at the expiration of the duration for exclusive sales, submit the information on exclusive sales to the securities supervision and administration institution under the State Council for the record.
A security company that undertakes sales of securities on a commission basis shall, within 15 days at the expiration of the duration for sale on a commission basis, together with the issuer submit the information on the sales of securities on a commission basis to the securities supervision and administration institution under the State Council for the record.
Article 28 Where stock issuance takes the form of premium issuance, its issuing price shall be decided by the issuer and the underwriting security company through consultation and submitted to the securities supervision and administration institution under the State Council for verification and approval.
Article 29 A domestic enterprise that goes in for direct or indirect issuance of securities overseas or listing for trading of its securities overseas must be subject to the approval of the securities supervision and administration institution under the State Council for approval.

Chapter III Securities Trading
Section 1 General Rules
Article 30 Securities bought or sold according to law by parties interested to securities trading must be securities issued and delivered in accordance with law.
No securities issued not in accordance with law shall be bought or sold.
Article 31 Stocks, corporate bonds and other securities issued in accordance with law restrictive provisions have been imposed by law on their time limit for transfer shall not be bought or sold within the restricted time limit.
Article 32 Stocks, corporate bonds and other securities the listing for trading of which has been verified and approved in accordance with law should be listed for trading at securities exchanges.
Article 33 Listing for trading of securities at securities exchanges should take the form of open and centralized competitive bidding.
Centralized competitive bidding in securities trading should follow the principle of price preference and time preference.
Article 34 Securities bought or sold by parties interested to securities trading may take paper form or other forms laid down by the securities supervision and administration institution under the State Council.
Article 35 Transactions in securities trading shall be concluded in spot stocks.
Article 36 Security companies shall not engage in securities trading operations of financing or securities accommodation from clients.
Article 37 Employees of securities exchanges, security companies and securities registration and settlement agencies, staff members of securities supervision and administration institutions and other personnel prohibited from participating in stocks trading by laws and regulations shall not, within their tenure of office or the legal time limit, hold, buy or sell stocks directly or use an assumed name or in the name of others, nor shall they accept stocks donated by others.
Anyone must, at the time becoming one of the personnel listed in the preceding paragraph, transfer the stocks originally held by him/her according to law.
Article 38 Securities exchanges, security companies and securities registration and settlement agencies must maintain secrecy for the accounts opened for their clients according to law.
Article 39 The specialized agency and personnel for drawing up such papers as the audit report, assets assessment report or legal advice for stock issuance shall not, within the underwriting period of the said stocks and within 6 months at the expiration of the time period, buy or sell the said stocks.
In addition to the provisions of the preceding paragraph, the specialized agency and personnel for drawing up the audit report, assets assessment report or legal advice for a listed company shall not, starting from the date of acceptance of entrustment of the listed company to within 5 days after the above-mentioned documents have been made public, buy or sell the said stocks.
Article 40 Collection of fees for securities trading must be reasonable and items for fee collection, rates for fee collection and methods of fee collection shall be made public.
Items for fee collection, rates of fee collection and measures for administration shall be uniformly determined by the departments of administration concerned under the State Council.
Article 41 A stockholder holding 5% of the stocks issued by a joint-stock company limited should, within 3 days starting from the date of the amount of stocks held by him/her reaching the said percentage, report to the company which must report to the securities supervision and administration institution under the State Council within 3 days starting from the date of receipt of the report; when it belongs to a listed company, a report shall be submitted simultaneously to the securities exchanges.
Article 42 The stockholder prescribed in the preceding Article who sells the stocks of the said company held by him/her within 6 months after buying in, or again buys in within 6 months of selling, the returns accrued therefrom shall belong to the said company, and the board of directors of the company should withdraw the returns gained by the said stockholder. However, a security company that holds more than 5% of the stocks as a result of the left-over stocks after sales of buying in for exclusive sales, its sale of the said stocks shall not be subject to the time limit of 6 months.
Where the board of directors of a company fails to implement the provisions of the preceding paragraph, other stockholders have the right to demand implementation by the board of directors.
Where the board of directors of a company fails to implement the provisions of the First Paragraph resulting in damage to the company, the director(s) held responsible shall bear joint responsibility for compensation in accordance with law.
Section 2 Securities Listing
Article 43 Application by a joint-stock company limited for listing for trading of its stocks must be submitted to the securities supervision and administration institution under the State Council for verification and approval.
The securities supervision and administration institution under the State Council may authorize securities exchanges to verify and approve applications for listing of stocks pursuant to legal terms and legal procedures.
Article 44 The state encourages the listing for trading of corporate stocks conforming both to the industrial policy and conditions for listing.
Article 45 The following documents shall be presented at the time of filing an application for listing for trading with the securities supervision and administration institution under the State Council:
(1) a report on listing;
(2) the resolution of the general meeting of shareholders for the application for listing;
(3) articles of association of the company;
(4) business licence of the company;
(5) financial and accounting reports of last three years of the company or those since the establishment of the company examined and certified by a legal certification agency;
(6) legal advice and a letter of reference by a security company; and
(7) the latest prospectus.
Article 46 An issuer shall, upon verification and approval of the application for listing for trading of the stocks by the securities supervision and administration institution under the State Council, present the approval document and the relevant documents prescribed in the preceding paragraph to securities exchanges.
The securities exchanges shall, within 6 months starting from the date of receipt of the documents prescribed in the preceding paragraph presented by the issuer of the said stocks, arrange the listing for trading of the said stocks.
Article 47 The listed company shall, upon the consent of the securities exchanges on the application for listing for trading of its stocks, announce the approved relevant documents for the listing of the stocks, and place the said documents at a designated place for public reference 5 days before the listing for trading.
Article 48 In addition to announcing the application document for listing prescribed in the preceding Article, the listed company shall also announce the following particulars:
(1) the date of approval of trading of its stocks at securities exchanges;
(2) list of the top ten stockholders holding maximum shares of the company and the number of shares held by them; and
(3) names of directors, commissioners, managers and high-level administrators concerned and information on the stocks and bonds of the company held by them.
Article 49 For a listed company that has forfeited the listed requirements prescribed by the Company Law, its stocks shall be suspended for listing or terminated for listing according to law.
Article 50 An application by a company for listing for trading of the corporate bonds issued by it must be submitted to the securities supervision and administration institution under the State Council for verification and approval.
The securities supervision and administration institution under the State Council may authorize a securities exchange in the verification and approval of the application for listing of corporate bonds pursuant to legal terms and legal procedures.
Article 51 Application by a company for listing for trading for its corporate bonds must meet the following requirements:
(1) the time limit of the corporate bonds shall be more than one year;
(2) the actual issuance amount of the corporate bonds shall not be less than RMB 50 million Yuan; and
(3) the company still meets the legal requirements for the issuance of corporate bonds at the time of application for listing of its bonds.
Article 52 The following documents shall be presented at the time of filing an application for listing of corporate bonds with the securities supervision and administration institution under the State Council:
(1) a report on listing;
(2) the resolution of the board of directors on the application for listing;
(3) articles of association of the company;
(4) business licence of the company;
(5) measures for the raising of corporate bonds; and
(6) the actual amount of issuance of corporate bonds.
Article 53 Upon verification and approval of the application for listing for trading of corporate bonds, their issuer should present the approval document and the relevant documents prescribed in the preceding Article to the securities exchanges.
The securities exchanges should, within 3 months starting from the date of receipt of the documents prescribed in the preceding Article which have been presented by the said bonds issuer, arrange the listing for trading of the said bonds.
Article 54 The issuer should, upon consent of the application for listing for trading of corporate bonds by the securities exchanges, announce the report on the listing of corporate bonds, the approval document and relevant application documents for listing 5 days before the listing for trading of the corporate bonds, and place them at a designated place for public reference.
Article 55 Any company that has any of the following circumstances following the listing for trading of its corporate bonds, the listing for trading of its corporate bonds shall be temporarily suspended according to the decision of the securities supervision and administration institution under the State Council:
(1) the company has committed major illegal acts;
(2) a major change has taken place in the company that does not conform to the listing requirements for corporate bonds;
(3) the funds raised through corporate bonds have not been used in uses approved by the examination and approval organ;
(4) failure to fulfil obligations in accordance with the measures for the raising of corporate bonds; and
(5) the company has suffered losses for two consecutive years.
Article 56 Any company that has any of the circumstances listed in Section (1) and Section (4) of the preceding paragraph which has been ascertained to have serious consequences, or has any of the circumstances listed in Section (2), Section (3) and Section (5) of the preceding paragraph which has not been removed within the specified time period, the listing of the said corporate bonds shall be terminated according to the decision of the securities supervision and administration institution under the State Council.
In the event of disbandment, being ordered to close down according to law or declared bankrupt of a company, the securities exchanges shall terminate the listing of its corporate bonds and submit a report to the securities supervision and administration institution under the State Council for the record.
Article 57 The securities supervision and administration institution under the State Council may authorize securities exchanges to suspend or terminate the listing of stocks or corporate bonds according to law.
Section 3 Sustained Open Information
Article 58 For issuance of stocks according to law verified and approved by the securities supervision and administration institution under the State Council, or issuance of corporate bonds according to law approved by the departments authorized by the State Council, an announcement shall, pursuant to the provisions of the Company Law, be made on the prospectus and measures for the raising of corporate bonds. For issuance of new shares or corporate bonds according to law, an announcement shall also be made on the financial and accounting report.
Article 59 Documents for the issuance and listing of stocks or corporate bonds announced by a company must be truthful, accurate and complete, and must not carry false recordings, misleading statements or have major omissions.
Article 60 Any company whose stocks or corporate bonds have been listed for trading should, within two months starting from the date of the conclusion of the first half of every accounting year, submit a mid-term report recording the following contents to the securities supervision and administration institution under the State Council and the securities exchanges and make an announcements thereof:
(1) the financial and accounting report and management information of the company;
(2) particulars involving the company's major litigations;
(3) information on changes in stocks and corporate bonds already issued;
(4) major matters presented to the general meeting of stockholders for review; and
(5) other matters prescribed by the securities supervision and administration institution under the State Council.
Article 61 Any company whose stocks or corporate bonds have been listed for trading should, within four months starting from the date of the conclusion of every accounting year, submit an annual report recording the following contents to the securities supervision and administration institution under the State Council and the securities exchanges and make an announcement thereof:
(1) an overview of the company;
(2) the financial and accounting report and management information of the company;
(3) brief life sketches of the directors, commissioners, managers and high-level administrators concerned and information on stocks held by them;
(4) information on the stocks and corporate bonds already issued including a list of the top 10 stockholders holding the maximum shares of the company and the amount of shares held by them; and
(5) other matters prescribed by the securities supervision and administration institution under the State Council.
Article 62 A listed company should, in the event of occurrence of a major event which may have a big impact on the trading price of the stocks of the listed company yet the investors are unaware thereof, submit forthwith an interim report on the said major event to the securities supervision and administration institution under the State Council and the securities exchanges, and make an announcement thereof, explaining the substance of the event.
The following situations shall be construed as major events referred to in the preceding paragraph:
(1) major changes in the management policy and business scope of the company;
(2) decision(s) on major investment acts and major property acquisition of the company;
(3) an important contract concluded by the company that may have crucial impact on the assets, liabilities, rights and interests and management achievements;
(4) the situation of occurrence of major liabilities and failure to liquidate major liabilities due for breach of contract by the company;
(5) incurring of major losses or major losses exceeding 10% of the net assets of the company;
(6) major changes taking place in the external conditions for the production and management of the company;
(7) changes taking place in the chairman of the board of directors, and over one third of the directors or managers;
(8) great changes occurring in the shares held by stockholders holding more than 5% of the company's shares;
(9) decision on investment reduction, amalgamation, separation, disbandment and bankruptcy application of the company;
(10) revocation of resolution(s) of the general meeting of stockholders and board of directors by a court according to law on major litigation(s)involving the company; and
(11) other matters prescribed by laws and regulations.
Article 63 Any issuer, underwriting security company that has false recordings, misleading statements or major omissions resulting in losses of investors in securities trading in announcing the prospectus, measures for the raising of corporate bonds, the financial and accounting report, the listing reporting document, annual report, mid-term report, interim report, the issuer, underwriting security company should bear the responsibility for compensation, and the issuer, directors, commissioners and managers of the underwriting security company held responsible should bear joint responsibility for compensation.
Article 64 The announcements that have to be made pursuant to the provisions of laws and regulations should be carried in newspapers and periodicals designated by the departments concerned of the state or in a gazette published for the specific purpose, and shall be placed at offices of the companies and securities exchanges for reference by the public of society.
Article 65 The securities supervision and administration institution under the State Council shall exercise supervision over the annual reports, mid-term reports, interim reports as well as announcements of the listed companies, and exercise supervision over the distribution or allotment of new stocks for sale.
Securities supervision and administration institutions, securities exchanges, underwriting security companies and the personnel concerned must not disclose the contents of the announcements that have to be made by the companies pursuant to the provisions of laws and regulations prior to the announcement.
Article 66 The securities supervision and administration institution under the State Council shall make an announcement in time with respect to the nullification of listing qualifications of a listed company that has committed major illegal acts or does not possess other conditions for listing. A securities exchange shall make an announcement in time when making a decision prescribed in the preceding paragraph pursuant to authorization and submit it to the securities supervision and administration institution under the State Council for the record.
Section 4 Prohibited Trading Acts
Article 67 Insiders of securities trading inside information shall be prohibited from carrying out securities trading operations by taking advantage of the inside information.
Article 68 The following personnel shall be the insiders having knowledge of securities trading inside information:
(1) directors, commissioners, managers, assistant managers and high-level administrators concerned of companies issuing stocks or corporate bonds;
(2) stockholders holding more than 5% of the shares;
(3) high-level administrators of holding companies of a company issuing stocks;
(4) personnel who due to their positions in companies are able to obtain information on securities trading of the companies;
(5) staff members of securities supervision and administration institutions and other personnel exercising administration over securities trading owing to legal responsibilities;
(6) personnel concerned of intermediary agencies of society participating in securities trading or securities registration and settlement agencies and securities trading services agencies owing to legal responsibilities; and
(7) other personnel prescribed by the securities supervision and administration institution under the State Council.
Article 69 Information involving the management, finance of a company or having a major impact on the market price of the securities of the said company not yet made public in securities trading operations shall be inside information.
The following items of information all fall into inside information:
(1) major events listed in the Second Paragraph of Article 62 of this Law;
(2) the plan of a company for dividend distribution or investment increment;
(3) major changes in stock ownership of a company;
(4) major changes in liability guaranty of a company;
(5) mortgage, sale or scrapping of the major assets of a company for business purposes exceeding 30% of the said assets for a single time;
(6) acts of directors, commissioners, managers, assistant managers or other high-level administrators of a company possible of bearing liability for major damage compensation;
(7) the plan governing acquisition of a listed company; and
(8) other important information affirmed by the securities supervision and administration institution under the State Council to have a marked impact on securities trading prices.
Article 70 Insiders having knowledge of securities trading inside information or other personnel having obtained the inside information illegally must not buy in or sell the securities of the said company held by him/her/them, or disclose the said information or suggest others to buy or sell the said securities.
Where this Law has separate provisions, those provisions shall be applicable to the purchase of shares of a listed company by a stockholder holding more than 5% of the shares.
Article 71 Anyone shall be prohibited from employing the following means to obtain unjust interests or shift risks:
(1) to concentrate efforts in making use of the advantage in funds, the advantage in holdings or the advantage in information individually or in collusion in joint or continuous buying and selling and manipulating securities trading prices;
(2) to engage in mutual securities trading or mutual buying and selling of securities not held to influence securities trading price or securities trading volume at the time, price and in the mode agreed on in advance in collusion with others;
(3) to make oneself the object of trading to engage in self-buying and self-selling without transfer of ownership to influence securities trading price or securities trading volume; and
(4) to manipulate securities trading price by other means.
Article 72 Functionaries of the state, employees of news media and relevant personnel are prohibited from fabricating and disseminating false information to seriously influence securities trading.
Securities exchanges, security companies, securities registration and settlement agencies, securities trading services agencies, intermediary agencies of society and their employees, securities industry associations, securities supervision and administration institutions and their staff members are prohibited from making false statements or providing information misguidance in securities trading operations.
Dissemination of securities trading information by various media must be truthful, objective and misguidance shall be prohibited.
Article 73 Security companies and their employees shall, in securities trading, be prohibited from engaging in the following fraudulent acts of harming the interests of clients:
(1) to buy or sell securities for the client contrary to his/her entrustment;
(2) to provide the client with the written confirmation document of the trading not at the fixed time;
(3) to divert the securities the buying or selling of which has been entrusted by the client or divert the funds in the account of the client to other purposes;
(4) to buy or sell the securities in the account of the client without permission or to buy or sell securities usurping the name of the client;
(5) to induce the client to engage in unnecessary buying or selling of securities to seek commission; and
(6) other acts of harming the interests of the client in other indications contrary to the true intentions of the client.
Article 74 A legal person shall, in securities trading, be prohibited from opening an account in his/her/its name for the buying and selling of securities.
Article 75 Anyone shall, in securities trading, be prohibited from diverting public money to buy and sell securities.
Article 76 State-owned enterprises and holding enterprises of state-owned assets must not scalp stocks listed for trading.
Article 77 Securities exchanges, security companies, securities registration and settlement agencies, securities trading services agencies, intermediary agencies of society and their employees shall report to securities supervision and administration institutions in time on the prohibited trading acts uncovered in securities trading.

Chapter IV Listed Company Acquisition
Article 78 Listed company acquisition may take the form of acquisition by offer or acquisition by agreement.
Article 79 When an investor holds 5% of the shares issued by a listed company through securities trading at a securities exchange, he/she/it shall, within 3 days starting from the date of occurrence of the said fact, submit a report in writing to the securities supervision and administration institution under the State Council and the securities exchange, inform the listed company and make an announcement thereof; the investor shall not, within the above-mentioned specified time limit, buy or sell the stocks of the said listed company anymore.
When the percentage of stocks issued by the said listed company held by the investor increases or decreases by every 5% through securities trading at a securities exchange after the investor holding 5% of the stocks issued by a listed company, he/she/it shall submit a report and make an announcement thereof pursuant to the provisions of the preceding paragraph. The investor shall not, within the time limit of reporting and within two days of making the report and announcement, buy or sell the stocks of the said listed company anymore.
Article 80 The report and announcement in writing to be made pursuant to the provisions of the preceding paragraph should contain the following contents:
(1) name and residence of the stockholder;
(2) name and amount of stocks held; and
(3) date of the stocks held reaching legal percentage or the date of changes in increase or decrease of stocks held reaching legal percentage.
Article 81 At the time of an investor holding 30% of the stocks issued by a listed company through securities trading at a securities exchange, when he/she/it continues to make acquisitions, the investor should send an acquisition offer to all the stockholders of the said listed company according to law. However, where an exemption from sending an offer has been granted by the securities supervision and administration institution under the State Council is excluded.
Article 82 An acquirer who sends an acquisition offer pursuant to the provisions of the preceding paragraph must submit an acquisition report on the listed company to the securities supervision and administration institution under the State Council in advance recording expressly the following particulars:
(1) name and residence of the acquirer;
(2) decision on acquisition by the acquirer;
(3) name of the listed company to be acquired;
(4) purpose of acquisition;
(5) detailed names of the stocks to be acquired and the amount of shares to be acquired pre-determined;
(6) time limit of acquisition and price of acquisition;
(7) amount of fund required and fund guarantee for the acquisition; and
(8) percentage of number of shares of the company to be acquired held in the total number of shares issued by the said company at the time of submission of the acquisition report on the listed company.
The acquirer shall also submit simultaneously the company acquisition report prescribed in the preceding paragraph to the securities exchange.
Article 83 The acquirer shall, after 15 days starting from the date of submission of the listed company acquisition report pursuant to the provisions of the preceding paragraph, announce his/her/its acquisition offer.
The time limit for the acquisition offer must not be less than 30 days and must not be more than 60 days.
Article 84 The acquirer must not, within the time of validity of the acquisition offer, withdraw his/her/its acquisition offer.
The acquirer who needs to effect changes in the particulars in the acquisition offer within the period of validity of the acquisition offer must submit a report in advance to the securities supervision and administration institution under the State Council and the securities exchange and make an announcement thereof on approval.
Article 85 Various conditions for acquisition put forth in the acquisition offer shall be applicable to all the stockholders of the company to be acquired.
Article 86 When the shares of the company to be acquired held by the acquirer reach over 75% of the total number of shares issued by the said company at the expiration of the period of the acquisition offer, listing for trading of the stocks of the said listed company should be terminated at the securities exchanges.
Article 87 When the shares of the company to be acquired held by the acquirer reach over 90% of the total number of shares issued by the said company at the expiration of the acquisition offer, the remaining stockholders still holding the stocks of the company to be acquired have the right to sell their stocks to the acquirer on equal terms specified in the acquisition offer and the acquirer should acquire them.
The company acquired which is no longer qualified for the requirements specified in the Company Law upon completion of the act of acquisition should effect a change in its enterprise form.
Article 88 Where the form of acquisition by offer is adopted, the acquirer must not, within the period of the acquisition offer, buy or sell the stocks of the company to be acquired in forms other than those specified in the offer and on terms beyond those of the offer.
Article 89 Where the from of acquisition by agreement is adopted, the acquirer may, pursuant to the provisions of laws and regulations, effect transfer of stockholders' right with the stockholders of the company to be acquired in the form of an agreement.
Where the form of acquisition of listed company by agreement is adopted, the acquirer must, within 3 days upon conclusion of the agreement, submit a report in writing on the acquisition agreement to the securities supervision and administration institution under the State Council and make an announcement thereof.
The acquisition agreement shall not be implemented prior to the announcement.
Article 90 Where the form of acquisition by agreement is adopted, both parties to the agreement may temporarily entrust a securities registration and settlement agency for the safekeeping of the stocks transferred by agreement, and deposit the fund in a designated bank.
Article 91 The acquirer must not, in the acquisition of a listed company, transfer the stocks of the listed company to be acquired held by him/her/it within 6 months upon completion of the act of acquisition.
Article 92 Where the stocks of the company acquired are obtained through the form of acquisition by offer or acquisition by agreement and the said company has been disbanded that falls into company merger, the original stocks of the disbanded company shall be exchanged by the acquirer according to law.
Article 93 The acquirer should, upon conclusion of the act of acquisition of a listed company, submit a report on the acquisition to the securities supervision and administration institution under the State Council and the securities exchanges, and make an announcement thereof.
Article 94 Where the shares held by an investment agency authorized by the state are involved in the acquisition of a listed company, it shall be subject to the approval of the competent department concerned pursuant to the provisions of the State Council.

Chapter V Securities Exchanges
Article 95 A securities exchange is a legal entity that provides a trading site for centralized competitive bidding for securities with no purpose of profit-making.
Establishment and disbandment of a securities exchange shall be subject to the decision of the State Council.
Article 96 Articles of association must be formulated for the establishment of a securities exchange. Formulation and revision of articles of association of a securities exchange must be subject to the approval of the securities supervision and administration institution under the State Council.
Article 97 A securities exchange must display expressly the words of securities exchange in its name. Any other unit or individual must not use the name of securities exchange or a similar name.
Article 98 The various revenues at the disposal of a securities exchange on its own should first be used to guarantee the normal operation and gradual improvement of the securities trading site and facilities.
The accumulation of a securities exchange belongs to its members, its rights and interests shall be shared jointly by the members, and the accumulation must not be distributed to the members during its existence.
Article 99 A securities exchange shall establish a board of directors.
Article 100 A securities exchange shall have a general manager who shall be appointed or relieved of his/her duties by the securities supervision and administration institution under the State Council.
Article 101 Whoever has the circumstances specified in Article 57 of the Company Law or any of the following circumstances shall not serve as the person-in-charge of a securities exchange:
(1) the person-in-charge of a securities exchange or a securities registration and settlement agency or a director, or a commissioner or a manager of a security company who was removed from office as a result of illegal acts or acts of violation of discipline for not more than 5 years starting from the date of removal from office; and
(2) a lawyer, a chartered accountant or a specialized member of a legal asset assessment agency or authentication agency whose qualification has been revoked as a result of illegal acts or acts of violation of discipline for not more than 5 years starting from the date of revocation of the qualification.
Article 102 An employee of a securities exchange, a securities registration and settlement agency or a security company and a functionary of a state organ who has been dismissed as a result of illegal acts or acts of violation of discipline shall not be employed as an employee of a securities exchange.
Article 103 Those that enter securities exchanges to participate in centralized competitive bidding in trading must be security companies with securities exchange membership.
Article 104 An investor should open an account for securities trading in a security company and entrust the security company that has opened an account for him/her/it to buy or sell securities on his/her/its behalf in writing, making telephone calls or in other forms.
An investor that buys or sells securities through the security company that has opened an account for him/her/it should adopt market price commission or limited price commission.
Article 105 A security company shall, in accordance with the entrustment of an investor and the rule of time preference, file a trading application for participating in centralized bidding for trading on the trading floor of a securities exchange; a securities registration and settlement agency shall, on the basis of transaction results and pursuant to the rules of settlement and delivery, carry out settlement and delivery of securities and funds, and process the formalities of ownership transfer of securities registration.
Article 106 A security company that accepts entrustment or engages in self-operations must not sell the securities again on the day they are bought in.
Article 107 Securities exchanges should provide safeguards for organizing fair and centralized competitive bidding in trading, make public real-time quotations for securities trading, and make tabulated quotations for the securities market according to trading day and make an announcement thereof.
Article 108 Securities exchanges shall, pursuant to the provisions of laws and regulations, handle affairs of suspension of listing, resumption of listing or termination of listing of stocks and corporate bonds. Specific measures shall be formulated by the securities supervision and administration institution under the State Council.
Article 109 A securities exchange may, in the event of an emergency that affects the normal process of securities trading, take technical measures of suspending the listing; a securities exchange may, in the event of an emergency by force majeure or for the purpose of maintaining normal order of securities trading, decide to temporarily suspend the market.
A securities exchange that takes technical measures of suspending the listing or a decision on temporary suspension of the market must submit a report to the securities supervision and administration institution under the State Council in time.
Article 110 Securities exchanges shall carry out real-time monitoring of the securities transactions going on in the exchanges and submit a report on the abnormal trading pursuant to the requirements of the securities supervision and administration institution under the State Council.
Securities exchanges should exercise supervision over information disclosure by the listed companies and supervise and urge the listed companies to disclose information timely and accurately according to law.
Article 111 Securities exchanges should withdraw a certain percentage of amount of money from the trading charges, membership fees and seating fees collected by them for the establishment of a venture capital. The venture capital shall be administered by the board of directors of the securities exchanges.
Specific percentage to be withdrawn from and measures for the use of the venture capital shall be laid down by the securities supervision and administration institution under the State Council in conjunction with the department of finance under the State Council.
Article 112 Securities exchanges should deposit the guaranty money for trading and venture capital collected and kept in a special account of a bank of deposit, and must not use them without authorization.
Article 113 Securities exchanges shall, pursuant to laws and administrative regulations on securities, formulate specific rules for centralized competitive bidding for securities trading, formulate rules for membership management of securities exchanges and business rules for employees of securities exchanges and submit them to the securities supervision and administration institution under the State Council for approval.
Article 114 The person-in-charge and other employees of a securities exchange should practise challenge in the discharge of duties relating to securities trading involving relations of interests of the person himself/herself or his/her relations.
Article 115 The transaction results for transactions concluded pursuant to the trading rules formulated according to law must not be changed. Civil liability to be borne by the trader who has violated rules in trading must not be absolved; benefits accrued from trading against rules shall be dealt with pursuant to relevant provisions.
Article 116 Any person engaging in securities trading in a securities exchange violates the rules governing trading of a securities exchange shall be imposed disciplinary sanctions by the securities exchange; where the circumstances are serious, his/her qualification shall be revoked and he/she shall be prohibited from entering the trading place for securities trading.

Chapter VI Security Companies
Article 117 Establishment of a security company must be subject to the examination and approval of the securities supervision and administration institution under the State Council. No securities business operations shall be conducted without the approval of the securities supervision and administration institution under the State Council.
Article 118 A security company referred to in this Law means a limited liability company or a join-stock company limited engaging in securities business operations approved pursuant to the provisions of the Company Law and the provisions of the preceding Article.
Article 119 The state exercises classified administration over security companies which shall be classified into integrated security companies and brokerage security companies, and the securities supervision and administration institution under the State Council shall issue business licences according to the classification.
Article 120 A security company must expressly display the words of limited liability security company or joint-stock security company limited in its name.
A securities brokerage company must expressly display the word of brokerage in its name.
Article 121 Establishment of an integrated security company must have the following qualifications:
(1) a minimum registered capital of RMB 500 million Yuan;
(2) Its main administrators and business personnel must have qualifications for the securities profession;
(3) having a fixed business site and qualified trading facilities; and
(4) having sound and complete management rules and standardized classified management systems for self-operated business and brokerage business.
Article 122 The minimum registered capital of a securities brokerage company shall be RMB 50 million Yuan; its main administrators and business personnel must have qualifications for the securities profession; it has a fixed business site and qualified trading facilities; and it has sound and complete management rules.
Article 123 Establishment or withdrawal of branch(es), change in business scope or registered capital, change in articles of association, amalgamation, separation, change in the form of the company or disbandment of a security company must be subject to the approval of the securities supervision and administration institution under the State Council.
Article 124 The total amount of external liabilities of a security company must not exceed the prescribed multiple(times) of its amount of net assets; its total amount of floating liabilities must not exceed a certain percentage of the total amount of its floating assets; its specific multiple(times), percentage and control measures shall be worked out by the securities supervision and administration institution under the State Council.
Article 125 Whoever has the circumstance prescribed in Article 57 of the Company Law or any of the following circumstances shall not serve as a director, a commissioner or a manager of a security company:
(1) the person-in-charge of a securities exchange or a securities registration and settlement agency of a director, or a commissioner, or a manager of a security company who was relieved of the post for illegal acts or acts of violation of discipline for not more than 5 years starting from the date of relief of the post; and
(2) a lawyer, a chartered accountant or specialized personnel of legal asset assessment agency or authentication agency whose qualification was revoked for illegal acts or acts of violation of discipline for not more than 5 years starting from the date of revocation of the qualification.
Article 126 Employees of securities exchanges, securities registration and settlement agencies and security companies and functionaries of state organs dismissed for illegal acts or acts of violation of discipline must not be employed as employees of security companies.
Article 127 Functionaries of state organs and other personnel whose holding of concurrent posts in companies is prohibited by provisions of laws and administrative regulations must not take up concurrent positions in security companies.
Directors, commissioners, managers and business personnel of a security company must not take up concurrent positions in other security companies.
Article 128 Security companies shall withdraw trading risk reserve from the yearly after-tax profit for making up the losses in securities trading, specific percentage of the withdrawal shall be fixed by the securities supervision and administration institution under the State Council.
Article 129 An integrated security company may operate the following securities businesses:
(1) securities brokerage business;
(2) self-operated securities business;
(3) securities underwriting business; and
(4) other securities businesses verified and determined by the securities supervision and administration institution under the State Council.
Article 130 A securities brokerage company shall be permitted to specialize in securities brokerage business only.
Article 131 A security company should, pursuant to the business prescribed in the two preceding Articles, file a business scope application which shall be verified and determined by the securities supervision and administration institution under the State Council.
A security company must not operate securities businesses and other businesses beyond the verified and determined business scope.
Article 132 An integrated security company must handle its brokerage business and self-operated business separately, the business personnel and financial accounts should also be separated, and there must be no mixed operations.
The transaction settlement funds of clients must be deposited in full in a designated commercial bank and a separate account be opened for management. Diversion of clients' transaction settlement funds to other purposes shall be strictly prohibited.
Article 133 Bank funds shall be prohibited from flowing into stock markets in violation of regulations. A security company must use its own funds and funds raised according to law in its self-operated business.
Article 134 The self-operated business of a security company must be conducted in its own name and must not be conducted under the cloak of other's name or in the name of an individual.
A security company must not lend its self-operations account to others for use.
Article 135 A security company has the right to autonomous management according to law, its lawful management shall be free from intervention.
Article 136 A security company whose registered capital is lower than that required for corresponding business prescribed by this Law shall be revoked of the verification and determination of its relevant business scope by the securities supervision and administration institution under the State Council.
Article 137 A security company engaging in intermediary business, buying and selling securities for clients as an agent in securities trading shall be a securities broker with legal personality.
Article 138 A security company must, in handling brokerage business, open separate securities accounts and fund accounts for clients and manage the securities and funds delivered by the clients on separate ledgers according to each account, make truthful records on transactions and must not make false records.
A client opening an account must hold lawful certification proving the identity of Chinese citizenship or Chinese legal personality.
Article 139 A security company should, in handling brokerage business, prepare and place the uniformly printed letters of authority for buying and selling of securities for use by clients. Records on clientage must be made for the adoption of other forms of clientage.
For authority by clients for buying and selling of securities, whether a transaction has been concluded or not, the record on its authority should be deposited at the security company in accordance with the specified time period.
Article 140 A security company that accepts the entrustment of buying and selling of securities should buy and sell securities by proxy according to the trading rules on the basis of the names of the securities, amount of buying and selling, mode of offer price and price range; a report slip on the conclusion of buying and selling shall be prepared according to rules and handed over to the client on the conclusion of the buying and selling.
The reconciliation sheet confirming the trading acts and its trading results in securities trading must be truthful and shall be examined and verified by an auditor other than the consigner case by case to ensure the consistency of the balance of securities in book account and the securities in actual possession.
Article 141 A security company that accepts entrustment to sell securities must be the securities actually in the securities account of a client and must not make an accommodation in securities trading for the client.
A security company that accepts entrustment to buy in securities must effect payment with the fund actually in the fund account of a client and must not arrange financing in trading for the client.
Article 142 A security company that handles brokerage business must not accept carte blanches of a client and decide the buying and selling of securities, select types of securities and decide the quantity of buying and selling or price of buying and selling.
Article 143 A security company must not in any form make a commitment to a client on the returns of buying and selling of securities or compensation for the losses in buying and selling of securities.
Article 144 A security company and its employees must not accept the entrustment of a client to buy and sell securities in private without going through the location of business established according to law.
Article 145 For an employee of a security company who violates trading rules in securities trading operations according to the directive of the security company to which he/she belongs or by taking advantage of his/her position, the security company to which he/she belongs shall bear full responsibility.

Chapter VII Securities Registration and Settlement Agencies
Article 146 A securities registration and settlement agency provides centralized services in registration, trust and settlement for security transactions and constitutes a legal entity with no purpose of profit-making.
Establishment of a securities registration and settlement agency must be subject to the approval of the securities supervision and administration institution under the State Council.
Article 147 Establishment of a securities registration and settlement agency should have the following qualifications:
(1) Its own capital shall be not less than RMB 200 million Yuan;
(2) It has a location and facilities necessary for securities registration, trust and settlement services;
(3) Its main administrators and business personnel must have employment qualification for securities business; and
(4) other qualifications prescribed by the securities supervision and administration institution under the State Council.
The words of securities registration and settlement should be expressly displayed in the name of a securities registration and settlement agency.
Article 148 A securities registration and settlement agency shall perform the following functions:
(1) establishment of securities accounts and settlement accounts;
(2) trust and ownership transfer of securities;
(3) roster registration of securities holders;
(4) settlement and delivery and receipt of listed securities transactions of securities exchanges;
(5) allotment and payout of equity entrusted by issuers;
(6) handling of inquiries relating to the above-mentioned businesses; and
(7) other businesses approved by the securities supervision and administration institution under the State Council.
Article 149 Securities registration and settlement shall adopt centralized and uniform operational mode nationwide.
Articles of association and business rules of securities registration and settlement agencies should be formulated according to law and must be subject to the approval of the securities supervision and administration institution under the State Council.
Article 150 The securities held by a securities holder should, prior to listing for trading, be put under trust in full at a securities registration and settlement agency.
A securities registration and settlement agency must not use the securities of a client for hypothecation or lending to others.
Article 151 A securities registration and settlement agency should provide a roster of securities holders and its relevant materials to the securities issuer.
A securities registration and settlement agency should, on the basis of the results of securities registration and settlement, confirm the fact of securities held by a securities holder and provide materials on the registration of the securities holder.
A securities registration and settlement agency should guarantee the truthfulness, accuracy and completeness of the roster of securities holders and records of ownership transfer registration and no forgery, tampering with and destruction thereof shall be permitted.
Article 152 A securities registration and settlement agency should take the following measures to ensure normal business operations:
(1) It has essential services equipment and perfect data security protection measures;
(2) to establish sound and perfect business, financial and security and precaution and other management rules; and
(3) to establish a perfect risk management system.
Article 153 A securities registration and settlement agency should preserve the original vouchers of registration, trust and settlement in a proper way. The period of safekeeping of important original vouchers shall not be less than 20 years.
Article 154 A securities registration and settlement agency should establish a settlement venture capital and deposit it in a rubricated account in a designated bank. The settlement venture capital shall be used for losses caused to the securities registration and settlement agency as a result of technical failure, mistakes in operations and force majeure.
The securities settlement venture capital shall be withdrawn from the business revenue and returns of the securities registration and settlement agency and may be paid by security companies according to a certain percentage of the business volume of securities trading.
Measures for the raising and administration of securities venture capital shall be formulated by the securities supervision and administration institution under the State Council in conjunction with the department of finance under the State Council.
Article 155 The securities settlement venture capital should be put under special-purpose administration.
Upon compensation with the venture capital by a securities registration and settlement agency, recourse of compensation should be sought from the responsible person involved.
Article 156 Application for disbandment of a securities registration and settlement agency should be subject to the approval of the securities supervision and administration institution under the State Council.

Chapter VIII Securities Trading Services Agencies
Article 157 Specialized securities investment consultancy agencies and credit appraisal agencies may be established in accordance with the requirements of the securities investment and securities trading businesses. Conditions for the establishment of, procedures for examination and approval and business rules of securities investment consultancy agencies and credit appraisal agencies shall be formulated by the securities supervision and administration institution under the State Council.
Article 158 Business personnel of specialized securities investment consultancy agencies and credit appraisal agencies must have professional knowledge about securities and experiences of over 2 years in securities business. Standards for affirming the qualification for securities business and measures for management shall be formulated by the securities supervision and administration institution under the State Council.
Article 159 Employees of securities investment consultancy agencies must not commit the following acts:
(1) to engage in securities investment for a client as an agent;
(2) to agree with a client on the sharing of securities investment returns or sharing of securities investment losses;
(3) to buy or sell the stocks of the listed companies for which the consultancy agency provides services; and
(4) other acts prohibited under laws and regulations.
Article 160 Specialized securities investment consultancy agencies and credit appraisal agencies should, pursuant to the rates or measures for the collection of charges worked out by the departments of administration concerned under the State Council, collect service charges.
Article 161 Specialized agencies and personnel for drawing up such documents as the audit report, asset assessment report or legal advice for the issuance and listing of securities or securities trading operations must, pursuant to the working procedures prescribed in the employment rules, draw up the reports, and verify and authenticate the truthfulness, accuracy and completeness of the contents of the reports drawn up by them, and bear joint responsibility for the part(s) for which it/he/she is responsible.

Chapter IX Securities Industry Associations
Article 162 Securities industry associations are self-policing organizations of the securities industry and constitute juridical associations.
Security companies should join the securities industry association.
The general meeting of members composed of all the members constitutes the organ of power of the securities industry association.
Article 163 The articles of association of the securities industry association shall be formulated by the general meeting of members and submitted to the securities supervision and administration institution under the State Council for the record.
Article 164 The securities industry association performs the following duties and responsibilities:
(1) to assist securities supervision and administration institutions in the education and organization of members in implementing laws and administrative regulations on securities;
(2) to safeguard the legitimate rights and interests of members according to law and report the suggestions and requests of members to the securities supervision and administration institution;
(3) to gather and sort out securities information to provide services for the members;
(4) to formulate rules which the members should abide by, organize employees of member units in professional training and conduct business exchange among members;
(5) to mediate disputes among members and between members and clients;
(6) to organize members in carrying out research on the development, operation and relevant contents of the securities industry;
(7) to supervise and inspect acts of members and impose disciplinary sanctions on members pursuant to provisions for violation of laws, administrative regulations or articles of association of the association; and
(8) other duties and responsibilities vested by the securities supervision and administration institution under the State Council.
Article 165 The securities industry association shall set up a council. Members of the council shall be elected according to the provisions of the articles of association.

Chapter X Securities Supervision and Administration Institution
Article 166 The securities supervision and administration institution under the State Council exercises supervision and administration over the securities market, maintain the order of the securities market and ensure its lawful operation.
Article 167 The securities supervision and administration institution under the State Council shall, in the exercise of supervision and administration of the securities market, perform the following duties and responsibilities:
(1) to formulate rules and regulations governing securities market supervision and administration according to law and to exercise the power of examination and approval or of verification and approval according to law;
(2) to carry out supervision and administration of the issuance, trading, registration, trust and settlement of securities according to law;
(3) to exercise supervision and administration of securities business operations of securities issuers, listed companies, securities exchanges, security companies, securities registration and settlement agencies, securities investment fund administration agencies, securities investment consultancy agencies, credit appraisal agencies as well as law firms, accounting firms and asset assessment agencies according to law;
(4) to formulate qualification standards and code of conduct for business personnel engaging in securities and supervise their implementation according to law;
(5) to supervise and inspect the openness of information on securities issuance and trading according to law;
(6) to provide guidance for and supervision over activities of the securities industry associations according to law;
(7) to investigate and handle acts in violation of the laws and regulations governing supervision and administration of the securities market according to law; and
(8) other duties and responsibilities stipulated in laws and regulations.
Article 168 The securities supervision and administration institution under the State Council has the power to adopt the following measures in performing its duties and responsibilities according to law:
(1) to enter a site of occurrence of illegal acts for investigation and evidence gathering;
(2) to inquire the parties concerned, unit(s) and individual(s) concerned of the event under investigation, and ask them to make explanations of matters relating to the event under investigation;
(3) to look up, copy the records on securities transactions, records on ownership transfer registration, financial and accounting materials as well as other relevant documents and materials of the parties concerned and unit(s)and individual(s) concerned of the event under investigation, and may seal up those documents and materials that may be transferred or concealed for safekeeping; and
(4) to investigate and make inquiry of the fund accounts, securities accounts of the parties concerned and unit(s) and individual(s) concerned of the event under investigation, and an application may be filed with the judicial organ for the freezing of the illegal funds and securities when there is evidence to prove that there are signs of transfer or concealment thereof.
Article 169 Functionaries of the securities supervision and administration institution under the State Council shall, in performing their duties and responsibilities, in carrying out supervision and inspection or investigation according to law, produce relevant ID cards, and have the obligation to keep the secrecy of the commercial secrets of the unit(s)and individual(s) concerned they have come to know.
Article 170 Functionaries of the securities supervision and administration institution under the State Council must be devoted to their duties, handle matters according to law, be impartial, honest and clean, and must not seek unlawful profits by taking advantage of their own positions.
Article 171 The securities supervision and administration institution under the State Council shall perform its duties and responsibilities according to law, the unit(s) and individual(s) under inspection and investigation should cooperate, truthfully provide relevant documents and materials, and must not refuse, obstruct or conceal.
Article 172 The securities supervision and administration institution under the State Council shall make public rules and regulations and rules for supervision and administration work formulated according to law.
The securities supervision and administration institution under the State Council should make public penalty decision(s) taken on illegal acts in securities on the basis of the results of investigation.
Article 173 The securities supervision and administration institution under the State Council should, upon uncovering of illegal acts in securities suspected of commitment of a crime in the performance of its duties and responsibilities according to law, transfer the case to a judicial organ for handling.
Article 174 Functionaries of the securities supervision and administration institution under the State Council must not take up concurrent posts in institutions under its supervision and control.

Chapter XI Legal Liability
Article 175 Whoever issues securities without authorization or issues securities by fabricating false issuance documents without verification and approval or examination and approval of a legal organ shall be ordered to stop the issuance, refund the funds raised and the additionally calculated bank deposit interests of the corresponding period, and concurrently imposed a fine of more than 1% less than 5% of the amount of funds raised illegally. The person-in-charge directly responsible and other personnel directly responsible shall be administered a warning and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 300000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 176 A security company that underwrites or acts as a commission agent for the buying and selling of securities issued without authorization and without verification and approval or examination and approval shall be banned by the securities supervision and administration institution, confiscated of the illegal income, and concurrently imposed a fine of more than 100% less than 500% of the illegal income. The person-in-charge directly responsible and other personnel directly responsible shall be administered a warning and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 300000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 177 Any issuer of securities verified and approved for listing for trading pursuant to the provisions of this Law who fails to disclose information in accordance with relevant provisions, or the information disclosed carries false recordings, misleading statements or has major omissions shall be ordered by the securities supervision and administration institution to make a rectification and the issuer shall be imposed a fine of more than RMB 300000 Yuan less than RMB 600000 Yuan. The person-in-charge directly responsible and other personnel directly responsible shall be administered a warning and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 300000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Any issuer of the preceding paragraph who fails to make an announcement of its listing documents or submit the relevant report on the specified time shall be ordered by the securities supervision and administration institution to make a rectification, and the issuer shall be imposed a fine of more than RMB 50000 Yuan less than RMB 100000 Yuan.
Article 178 Whoever illegally establishes a securities trading site shall be banned by the securities supervision and administration institution, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income. Where there is no illegal income, a fine of more than RMB 100000 Yuan less than RMB 500000 Yuan shall be imposed. The person-in-charge directly responsible and other personnel directly responsible shall be administered a warning and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 300000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 179 Whoever establishes a security company operating securities business without authorization and without approval and obtainment of a business license shall be banned by the securities supervision and administration institution, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income. Where there is no illegal income, a fine of more than RMB 30000 Yuan less than RMB 100000 Yuan shall be imposed. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 180 Any of the personnel prohibited from participating in stock trading provided for in laws and regulations who holds or buys and sells stocks directly or by using an assumed name or under the cloak of another person's name shall be ordered to dispose of the illegally held stocks according to law, confiscated of the illegal income and concurrently imposed a fine of less than the equivalent value of the stocks bought or sold; whoever is a state functionary shall also be imposed administrative sanctions according to law.
Article 181 Any employee of a securities exchange, a security company, a securities registration and settlement agency, a securities trading services agency, any staff member of a securities industry association or a securities supervision and administration institution who induces and lures investor(s)to buy or sell securities by deliberately providing false materials, forging, altering or destroying trading records shall be revoked of his/her employment qualification and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 50000 Yuan; whoever is a state functionary shall also be imposed administrative sanctions. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 182 Any specialized agency or its member drawing up such documents as an audit report, an asset assessment report or a legal advice for the issuance or listing of stocks that buys and sells stocks in violation of the provisions of Article 39 of this Law shall be ordered to dispose of the illegally acquired stocks according to law, confiscated of the illegal income and concurrently imposed a fine of less than the equivalent value of the stocks bought and sold.
Article 183 Any insider of inside information on securities trading or any person illegally acquiring inside information on securities trading who, prior to information involving securities issuance, trading or other information having a major influence on securities price being made public, buys in or sells the said securities or discloses the said information or suggests others to buy or sell the said securities, shall be ordered to dispose of the illegally obtained securities according to law, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income or less than the equivalent value of the securities bought and sold illegally. Where a crime has been constituted, criminal liability shall be investigated according to law.
Heavy penalty shall be imposed on any functionary of a securities supervision and administration institution for inside trading.
Article 184 Whoever obtains unjust profits or transfers risks by manipulating securities trading prices, or fabricating false prices for securities trading or false securities transaction volume in violation of the provisions of Article 71 of this Law shall be confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 185 Whoever diverts public money to buy and sell securities in violation of the provisions of this Law shall be confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income; whoever is a state functionary shall also be imposed administrative sanctions according to law. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 186 Any security company that sells for a client securities not actually in his/her/its account or buys in securities for a client through accommodation of funds in violation of the provisions of this Law shall be confiscated of the illegal income and concurrently imposed a fine of equivalent value of the illegally bought or sold securities. The person-in-charge directly responsible and other personnel directly responsible shall be administered a warning and concurrently imposed a fine of more than RMB 30000 Yuan less than RMB 300000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 187 Any security company that accepts the entrustment of a client or buys in securities in self-operations on the date of issue and again sells the said securities on the very day in violation of the provisions of this Law shall be confiscated of the illegal income and concurrently imposed a fine of more than 5% less than 20% of the total amount of transactions done in buying and selling of securities.
Article 188 Whoever fabricates and disseminates false information influencing securities trading, disrupting the securities trading market shall be imposed a fine of more than RMB 30000 Yuan less than RMB 200000 Yuan. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 189 Any securities exchange, any security company, any securities registration and settlement agency, any securities trading services agency, any intermediary agency of society and any of its employees, or any securities industry association, the securities supervision and administration institution or any of its staff members that makes a false statement or provide information misguidance in securities trading operations shall be ordered to make a rectification and imposed a fine of more than RMB 30000 Yuan less than RMB 200000 Yuan; whoever is a state functionary shall also be imposed administrative sanctions according to law. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 190 Any legal entity that opens an account in the name of an individual for the buying and selling of securities in violation of the provisions of this Law shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income; its person-in-charge directly responsible and other personnel directly responsible who are state functionaries shall be imposed administrative sanctions.
Article 191 Any integrated security company that engages in self-operated businesses under the cloak of another person's name or in the name of an individual in violation of the provisions of this Law shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income; where there are serious circumstances, its self-operated businesses shall be terminated.
Article 192 Any security company that causes losses to a client for breach of the entrustment of the client in buying and selling of securities, in handling trading matters and in handling other matters other than trading contrary to the indication of the real intention of the client shall bear responsibility for compensation according to law and concurrently be imposed a fine of more than RMB 10000 Yuan less than RMB 100000 Yuan.
Article 193 Any security company or securities registration and settlement agency and any of its employees who, without the entrustment of a client, buys and sells, diverts to other purposes or lends the securities in the client's account or use the client's securities for hypothecation, or diverts the funds in the client's account to other purposes shall be ordered to make a rectification, confiscated of the illegal income, and imposed a fine of more than 100% less than 500% of the illegal income, and shall be ordered to close down or revoked of the employment qualification certificate of the person responsible. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 194 Any security company handling brokerage business that accepts carte blanches of a client in buying and selling securities, or makes a commitment to the client on the returns on the buying and selling of securities or compensation for the losses in securities buying and selling shall be ordered to make a rectification and imposed a fine of more than RMB 50000 Yuan less than RMB 200000 Yuan.
Article 195 Whoever seeks unjust profits by taking advantage of the acquisition of a listed company in violation of the legal procedures for the acquisition of listed companies shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income.
Article 196 Any security company and any of its employees that accepts the entrustment of a client in private for the buying and selling of securities in violation of the provisions of this Law shall be confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income.
Article 197 Any security company that manages unlisted securities trading without approval in violation of the provisions of this Law shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income.
Article 198 A security company that fails to start business for more than 3 months without any justifiable reason or close down on its own for more than 3 months in a row after opening for business upon establishment shall be revoked of the company's business licence by the company registration organ.
Article 199 Any security company that operates securities businesses beyond the business scope permitted in violation of the provisions of this Law shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income. Where there are serious circumstances, it shall be ordered to shut down.
Article 200 Any security company in simultaneous operations of securities brokerage business and self-managed securities business that fails to handle the businesses separately according to law and conduct mixed operations shall be ordered to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income; where there are serious circumstances, it shall be revoked of the securities businesses originally verified and determined by the securities supervision and administration institution.
Article 201 Whoever obtains securities business permit by deceitful means by presenting false certification documents or employing other fraudulent means to conceal important facts, or any security company that commits serious illegal acts in securities trading and is no longer qualified for the operations shall be revoked of its securities business permit and ordered to close down.
Article 202 Any specialized agency that draws up audit reports, asset assessment reports or legal advice for the issuance and listing of securities or for securities trading operations practises fraud in the contents for which it should have been responsible shall be confiscated of the illegal income, concurrently imposed a fine of more than 100% less than 500% of the illegal income, and the competent department concerned shall order the said agency to close down and revoke the qualification certificate of the person(s) directly responsible.
Article 203 Any securities registration and settlement agency or securities trading services agency established without authorization and without the approval of the securities supervision and administration institution shall be banned by the securities supervision and administration institution, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income.
Any securities registration and settlement agency and securities trading services agency that violates the provisions of this Law or the business rules uniformly formulated by the securities supervision and administration institution shall be ordered by the securities supervision and administration institution to make a rectification, confiscated of the illegal income and concurrently imposed a fine of more than 100% less than 500% of the illegal income. Where there are serious circumstances, it shall be ordered to close down.
Article 204 Any securities supervision and administration institution that verifies and approves an application for securities issuance and listing not in conformity with the provisions of this Law, or approves an application for the establishment of a security company, a securities registration and settlement agency or securities trading services agency not in conformity with the qualifications provided for in this Law constituting serious circumstances, the person-in-charge directly responsible and other personnel directly responsible shall be imposed administrative sanctions according to law. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 205 Any functionary of the securities supervision and administration institution and any member on the issuance examination and verification committee who fails to fulfil the duties and responsibilities specified in this Law, indulges in malpractices for selfish gains, negligence of duty or deliberately making things difficult for the relevant parties interested shall be imposed administrative sanctions. Where a crime has been constituted, criminal liability shall be investigated according to law.
Article 206 Whoever issues or underwrites corporate bonds in violation of the provisions of this Law shall be imposed a penalty by the department authorized by the State Council pursuant to the provisions of Article 175,Article 176 and Article 202 of this Law.
Article 207 Whoever should bear civil liability for compensation and effect payment of a fine or penalty in violation of the provisions of this Law while his/her property is insufficient to make simultaneous payment thereof shall bear civil liability for compensation first.
Article 208 Whoever obstructs the securities supervision and administration institution in the exercise of its duties and responsibilities of supervision and inspection with violence and threat shall be investigated for criminal liability according to law; whoever refuses and obstructs the securities supervision and administration institution and its staff members in the exercise of the duties and responsibilities of supervision and inspection without resorting to violence and threat shall be imposed penalty pursuant to the provisions of the Regulations on Public Security Administration Penalties.
Article 209 The illegal income confiscated and fines from illegal acts of securities issuance and trading pursuant to this Law shall be handed over to the state treasury in full.
Article 210 The party interested that refuses to obey the penalty decision of the securities supervision and administration institution or the department authorized by the State Council may apply for reconsideration according to law, or take legal action at a people's court directly according to law.

Chapter XII Supplementary Provisions
Article 211 Securities the listing for trading of which at securities exchanges already approved pursuant to administrative regulations prior to the coming into force of this Law shall continue to be traded according to law. Securities operating agencies the establishment of which was approved pursuant to the provisions of administrative regulations and the department of banking administration under the State Council prior to the coming into force of this Law which are not in full conformity with the provisions of this Law should meet the specified requirements within the given time period. Specific measures for implementation shall be formulated by the State Council separately.
Article 212 Procedures for the implementation of provision governing the clients' transaction settlement funds of this Law shall be worked out by the State Council separately.
Article 213 Specific measures for the subscription and trading of stocks of domestic companies in foreign currencies for overseas personages and institutions shall be formulated by the State Council separately.
Article 214 This Law shall enter into force as of July 1, 1999.

Promulgated by The Standing Committee of the National People's Congress on 1998-12-29