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Revised Provisions on Banning Entry into Securities Market Promulgated

Date:2020-05-11 18:32:22

On May 18 the Chinese Securities Regulatory Commission (“CSRC”) promulgated the Decision on Revising the Provisions on Banning Entry into the Securities Market (“Decision”), which increases the scope for banning entities from entering the securities market, especially with regards of lifetime bans. The Decision comes into force on June 22, 2015.

As per the Decision, in following five circumstances, a lifetime ban might be given: First, entities engaged in the sponsorship, underwriting, asset management, margin or other securities, or other securities services that deliberately violate statutory obligations and cause particularly serious consequences;

Second, entities that violate laws, administration regulations, or CSRC provisions in particularly bad ways (such as concealing or fabricating important information) or in relation to particularly large amounts of money;

Third, entities that violate laws, administrative regulations, or CSRC provisions via fraud, insider trading, or market manipulation and either: (1) seriously disrupts the securities or future markets and leads to serious social impacts; (2) earn significant illegal proceeds or other improper benefits; or (3) cause particularly serious damage to the interests of investors;

Fourth, entities that intentionally produce false evidence, conceal or destroy important evidence, etc… as well as those that hinder or resist regulatory institutions and their staff in exercising their duties of supervision, inspection, and investigation. Those that hinder or resist law and regulation enforcement in other ways might receive a temporary ban;

Fifth, entities that receive three administrative penalties (aside from mere warnings) or a ban on entering securities market in a five year period for the violation of laws, administrative regulations, or CSRC provisions.

Directors, supervisors or senior officers of a non-listed public company, and controlling shareholders or actual controllers, as well as the directors, supervisors or senior officers of the controlling shareholders or actual controllers, of a non-listed public company are included in the scope of application of the Decision i.e. they too could receive bans for the above actions.

The Decision should strengthen the supervision of the securities market, provide legal protection for investors, and promote the sustained and healthy development of the capital market.
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