Article 37 The securities as purchased and sold by any party who is involved in any securities transaction shall be the securities that have been legally issued and delivered. No securities that have been illegally issued may be purchased or sold.
Article 38 All stocks, corporate bonds or any other securities that have been legally issued, where there are any restrictive provisions of laws on the term of transfer thereof, may not be purchased or sold within the restrictive term.
Article 39 All stocks, corporate bonds or any other securities that have been publicly issued according to law shall be listed in a stock exchange as legally established or in any other places for securities transaction as approved by the State Council.
Article 40 The means of public and centralized transaction or any other means as approval by the securities regulatory authority under the State Council shall be adopted for listed trading of securities in stock exchanges.
Article 41 The securities as purchased or sold by the parties involved in securities transaction may be in paper form or in any other form as approved by the securities regulatory authority under the State Council.
Article 42 The securities transaction shall be carried out in the form of spot goods as well as any other form as prescribed by the State Council.
Article 43 The practitioners in stock exchanges, securities companies as well as securities registration and clearing institutions, the functionary of securities regulatory bodies as well as any other personnel who have been prohibited by laws and administrative regulations from engaging in any stock transaction shall, within their tenures or the relevant statutory term, not hold or purchase or sold any stock directly or in any assumed name or in a name of any other person, nor may they accept any stocks from any other person as a present. Anyone, when becoming any person as prescribed in the preceding paragraph herein, shall transfer the stocks he has held according to law.
Article 44 The stock exchanges, securities companies as well as securities registration and clearing institutions shall keep secret for the accounts as opened for their clients according to law.
Article 45 A securities trading service institution and the relevant personnel that produce such documents as auditing reports, asset appraisal reports or legal opinions for stock issuance may not purchase or sell any of the aforesaid stocks within the underwriting term of stocks or within 6 months as of the expiration of the underwriting term of stocks.
Except for the provisions as prescribed in the preceding paragraph herein, a securities trading service institutions and the relevant personnel that produce such documents as auditing reports, asset appraisal reports or legal opinions for listed companies may not purchase or sell any of the aforesaid stocks within the period from the day when an entrustment of a listed company is accepted to the day when the aforesaid documents are publicized.
Article 46 The charge for securities transaction shall be reasonable. The charging items, standards as well as methods shall be publicized. The charging items, standards and administrative measures of securities transaction shall be uniformly formulated by the relevant administrative department under the State Council.
Article 47 Where any director, supervisor and senior manager of a listed company or any shareholder who holds more than 5% of the shares of a listed company, sells the stocks of the company as held within 6 months after purchase, or purchases any stock as sold within 6 months thereafter, the proceeds generated therefrom shall be incorporated into the profits of the relevant company. The board of directors of the company shall withdraw the proceeds. However, where a securities company holds more than 5% of the shares of a listed company, which are the residing stocks after sale by proxy as purchased thereby, the sale of the foregoing stocks may not be limited by a term of 6 months. Where the board of directors of a company fails to implement the provisions as prescribed in the preceding paragraph herein, the shareholders concerned have the right to require the board of directors to implement them within 30 days. Where the board of directors of a company fails to implement them within the aforesaid term, the shareholders have the right to directly file a litigation with the people's court in their own names for the interests of the company. Where the board of directors of a company fail to implement the provisions as prescribed in paragraph 1herein, the directors in charge shall bear the joint and several liabilities according to law.
Section II Listing of Securities
Article 48 An application for the listing of any securities shall be filed with a stock exchange and shall be subject to the examination and approval of the stock exchange according to law and a listing agreement shall be reached by both parties. The stock exchanges shall, according to the decision of the department as authorized by the State Council, arrange the listing of government bonds.
Article 49 As for an application for the listing of any stocks, convertible corporate bonds or any other securities, to which a recommendation system is applied, as prescribed by laws and administrative regulations, an institution with the qualification of recommendation shall be employed as the recommendation party. The provisions of paragraphs 2 and 3 of Article 11 of the present Law shall be applied to the recommendation party of listing.
Article 50 A stock-limited company that files an application for the listing of its stocks shall satisfy the following requirements:
(1) The stocks shall have been subject to the examination and approval of the securities regulatory authority under the State Council and shall have been publicly issued;
(2) The total amount of capital stock shall be no less than RMB 30 million yuan;
(3) The shares as publicly issued shall reach more than 25 % of the total amount of corporate shares; where the total amount of capital stock of a company exceeds RMB 0.4 billion yuan, the shares as publicly issued shall be no less than 10% thereof; and
(4) The company may not have any major irregularity over the latest years and there is no false record in its financial statements. A stock exchange may prescribe the requirements of listing that are more strict than those as prescribed in the preceding paragraph herein, which shall be reported to the securities regulatory authority under the State Council for approval.
Article 51 The state encourages the listing of corporate stocks that comply with the relevant industrial policies and fulfill the relevant requirements of listing.
Article 52 With regard to an application for the listing of stocks, the following documents shall be reported to a stock exchange:
(1) The listing report;
(2) The resolution of the general assembly of shareholders regarding the application for the listing of stocks;
(3) The constitution of the company;
(4) The business license of the company;
(5) The financial statements of the company for the latest years as audited by an accounting firm according to law;
(6) The legal opinions as well as the Recommendation Letter of Listing;
(7) The latest prospectus; and
(8) Any other document as prescribed by the listing rules of the stock exchange.
Article 53 Where an application for the listing of stocks has been subject to the examination and approval of a stock exchange, the relevant company that has reached a listing agreement thereon shall announce the relevant documents for stock listing within the prescribed period and shall make the said documents available for public reference in designated places.
Article 54 A company that has reached a listing agreement may not only announce the documents as prescribed in the preceding Article herein but also announce the following items:
(1) The date when the stocks have been approved to be listed in a stock exchange;
(2) The name list of the top 10 shareholders who hold the largest number of shares in the company as well as the amount of stocks as held thereby;
(3) The actual controller of the company; and
(4) The names of the directors, supervisors and senior managers of the company as well as the relevant information on the stocks and bonds of the company as held thereby.
Article 55 Where a listed company is in any of the following circumstances, the stock exchange shall decide to suspend the listing of its stocks:
(1) Where the total amount of capital stock or share distribution of the company changes and thus, fails to meet the requirements of listing;
(2) Where the company fails to publicize its financial status according to the relevant provisions or has any false record in its financial statements, which may mislead the investors;
(3) Where the company has any major irregularity;
(4) Where the company has been operating at a loss for the latest 3 consecutive year; or
(5) Under any other circumstance as prescribed in the listing rules of the stock exchange.
Article 56 Where a listed company is in any of the following circumstances, the stock exchange shall decide to terminate the listing of its stocks:
(1) Where the total amount of capital stock or share distribution of the company changes and thus, fails to meet the requirements of listing, and where the company fails again to meet the requirements of listing within the period as prescribed by the stock exchange;
(2) Where the company fails to publicize its financial status according to the relevant provisions or has any false record in its financial statements, and refuses to make any correction;
(3) Where the company has been operating at a loss for the latest 3 consecutive years and fails to gain profits in the year thereafter;
(4) Where the company is dissolved or is announce bankruptcy; or
(5) Under any other circumstance as prescribed in the listing rules of the stock exchange.
Article 57 A company shall, when applying for the listing of corporate bonds, fulfill the following requirements:
(1) The term of corporate bonds shall be more than 1 year;
(2) The amount of corporate bonds to be actually issued shall be no less than RMB 50 million yuan; and
(3) The company shall meet the statutory requirements for the issuance of corporate bonds when applying for the listing of its bonds.
Article 58 A company shall, when filing an application for the listing of its corporate bonds, report the following documents to a stock exchange:
(1) The listing report;
(2) The resolution as adopted by the board of directors regarding the application for listing;
(3) The constitution of the company;
(4) The business license of the company;
(5) The measures for financing through the issuance of corporate bonds;
(6) The amount of corporate bonds to be actually issued; and
(7) Any other document as prescribed in the listing rules of the stock exchange. With regard to an application for the listing of convertible corporate bonds, the Recommendation Letter of Listing as produced by the relevant recommendation party shall be reported.
Article 59 Where an application for the listing of corporate bonds has been subject to the examination and approval of the stock exchange, the company that has reached a listing agreement thereon shall, within the prescribed period, announce its report on the listing of its corporate bonds as well as the relevant documents and make its application documents available for public reference in designated places.
Article 60 After any corporate bonds are listed, where the relevant company is in any of the following circumstances, the stock exchange may decide to suspend the listing of its corporate bonds:
(1) Where the company has any major irregularity;
(2) Where the company has any major change and thus fails to meet the requirements for the listing of corporate bonds;
(3) Where the funds as raised through the issuance of corporate bonds fail to be used according to the purpose as verified;
(4) Where the company fails to perform its obligations according to the measures for financing through the issuance of corporate bonds; or
(5) Where the company has been operating at a loss for the latest 2 consecutive years.
Article 61 Where a company is in any of the circumstances as described in item (1) or (4) of the preceding Article herein and the consequences as incurred therefrom have been verified to be serious, or where a company is under any of the circumstances as described in any of item (2), (3), or (5) of the preceding Article herein and fails to eliminate the relevant consequence within a specified time limit, the stock exchange shall decide to terminate the listing of corporate bonds of the company. In case a company is dissolved or declared bankrupt, the stock exchange shall terminate the listing of corporate bonds thereof.
Article 62 Any company, which is dissatisfied with a decision of a stock exchange on disapproving, suspending or terminating its listing, may file an application for a review with the review organ established by the stock exchange.
Section III On-going Information Disclosure
Article 63 The information as disclosed by issuers and listed companies according to law shall be authentic, accurate and integrate and may not have any false record, misleading statement or major omission.
Article 64 As for the stocks that have been publicly issued upon the verification of the securities regulatory authority under the State Council or for the corporate bonds that have been publicly issued upon the verification of the department as authorized by the State Council according to law, the prospectus or the measures for financing through the issuance of corporate bonds shall be announced. In an IPO of stocks or corporate bonds, the relevant financial statements shall be announced as well.
Article 65 A company whose shares or bonds have been listed for trading shall, within two months as of the end of the first half of each accounting year, submit to the securities regulatory authority under the State Council and the stock exchange a midterm report indicating the following contents and announce it:
(1) The financial statements and business situation of the company;
(2) The major litigation involving the company;
(3) The particulars of any change concerning the shares or corporate bonds thereof as already issued;
(4) The important matters as submitted to the general assembly of shareholders for deliberation; and
(5) Any other matter as prescribed by the securities regulatory authority under the State Council.
Article 66 A listed company whose shares or bonds have been listed for trading shall, within four months as of the end of each accounting year, submit to the securities regulatory authority under the State Council and the stock exchange an annual report indicating the following contents, and announce it:
(1) A brief account of the company's general situation;
(2) The financial statement and business situation of the company;
(3) A brief introduction to the directors, supervisors, and senior managers of the company well as the information regarding their shareholdings;
(4) The information on shares and corporate bonds as already issued, including the name list of the top 10 shareholders who hold the largest numbers of shares in the company as well as the amount of shares as held thereby;
(5) The actual controller of the company; and
(6) Any other matter as prescribed by the securities regulatory authority under the State Council.
Article 67 In the event of a major event that may considerably affect the trading price of a listed company's shares and that is not yet known to the investors, the listed company shall immediately submit a temporary report regarding the said major event to the securities regulatory authority under the State Council and the stock exchange and make an announcement to the general public as well, in which the cause, present situation and possible legal consequence of the event shall be indicated: The term "major event" as mentioned in the preceding paragraph herein refers to the following circumstances:
(1) A major change in the business guidelines or business scope of the company;
(2) A decision of the company on any major investment or major asset purchase;
(3) An important contract as concluded by the company, which may have an important effect on the assets, liabilities, rights, interests or business achievements of the company;
(4) Any incurrence of a major debt in the company or default on an overdue major debt;
(5) Any incurrence of a major deficit or a major loss in the company;
(6) A major change in the external conditions for the business operation of the company;
(7) A change concerning directors, no less than one-third of supervisors or managers of the company;
(8) A considerable change in the holdings of shareholders or actual controllers who each hold or control no less than 5% of the company's shares;
(9) A decision of the company on capital decrease, merger, division, dissolution, or application for bankruptcy;
(10) Any major litigation involving the company, or where the resolution of the general assembly of shareholders or the board of directors have been cancelled or announced invalid;
(11) Where the company is involved in any crime, which has been filed as a case as well as investigated into by the judicial organ or where any director, supervisor or senior manager of the company is subject to compulsory measures as rendered by the judicial organ; or
(12) Any other matter as prescribed by the securities regulatory authority under the State Council.
Article 68 The directors and senor managers of a listed company shall subscribe their opinions for recognition in the periodic report of their company in written form. The board of supervisors of a listed company shall carry out an examination on the periodic report of its company as formulated by the board of directors and produce the relevant examination opinions in writing. The directors, supervisors and senior managers of a listed company shall guarantee the authenticity, accuracy and integrity of the information as disclosed by their listed company.
Article 69 Where the prospectus, measures for financing through issuance of corporate bonds, financial statement, listing report, annual report, midterm report, temporary report or any information as disclosed that has been announced by an issuer or a listed company has any false record, misleading statement or major omission, and thus incurs losses to investors in the process of securities trading, the issuer or the listed company shall be subject to the liabilities of compensation. Any director, supervisor, senior manager or any other person of the issuer or the listed company directly responsible shall be subject to the joint and several liabilities of compensation, except for anyone who is able to prove his exemption of any fault. Where any shareholder or actual controller of an issuer or a listed company has any fault, he shall be subject to the joint and several liabilities of compensation together with the relevant issuer or listed company.
Article 70 The information as prescribed by law to be disclosed shall be publicized through the media as designated by the securities regulatory authority under the State Council and shall, at the same time, be made available for public reference at the company's domicile and a stock exchange.
Article 71 The securities regulatory authority under the State Council shall carry out supervision over annual reports, midterm reports, temporary reports of listed companies as well as their announcements, over the distribution or rationing of new shares of such listed companies and over the controlling shareholders and any other obligor of information disclosure of listed companies. The securities regulatory body, stock exchange, recommendation party or securities company involving in underwriting as well as the relevant personnel thereof shall, before an announcement is made by a company according to the provisions of the relevant laws and administrative regulations, divulge any content concerned before the announcement.
Article 72 Where a stock exchange decides to suspend or terminate the listing of any securities, it shall announce the decision in a timely manner and report it to the securities regulatory authority under the State Council for archival purpose.
Section IV Prohibited Trading Acts
Article 73 Any insider who has access to any insider information of securities trading or who has unlawfully obtained any insider information is prohibited from taking advantage of the insider information as held thereby to engage in any securities trading.
Article 74 The insiders who have access to insider information of securities trading include:
(1) Directors, supervisors, and senior managers of an issuer;
(2) Shareholders who hold no less than 5% of the shares in a company as well as the directors, supervisors, and senior managers thereof, or the actual controller of a company as well as the directors, supervisors, and senior managers thereof;
(3) The holding company of an issuer as well as the directors, supervisors, and senior managers thereof;
(4) The personnel who may take advantage of their posts in their company to obtain any insider information of the company concerning the issuance and transaction of its securities;
(5) The functionary of the securities regulatory body, and other personnel who administer the issuance and transaction of securities pursuant to their statutory functions and duties;
(6) The relevant personnel of recommendation institutions, securities companies engaging in underwriting, stock exchanges, securities registration and clearing institutions and securities trading service organizations; and
(7) Any other person as prescribed by the securities regulatory authority under the State Council.
Article 75 For the purpose of the present Law, the term "insider information" refers to the information that concerns the business or finance of a company or may have a major effect on the market price of the securities thereof and that hasn't been publicized in securities trading. The following information all falls into the scope of insider information:
(1) The major events as prescribed in paragraph 2 of Article 62 of the present Law;
(2) The plan of a company concerning any distribution of dividends or increase of capital;
(3) Any major change in the company's equity structure;
(4) Any major change in guaranty of the company's obligation;
(5) Where the mortgaged, sold or discarded value of a major asset as involved in the business operation of the company exceeds 30 % of the said asset in a one-off manner;
(6) Where any act as conducted by any director, supervisor or senior manager of the company may be rendered liabilities of major damage and compensation;
(7) The relevant plan of a listed company regarding acquisition; and
(8) Any other important information that has been recognized by the securities regulatory authority under the State Council as having a marked effect on the trading prices of securities.
Article 76 Any insider who has access to insider information or has unlawfully obtained any insider information on securities trading may not purchase or sell the securities of the relevant company, or divulge such information, or advise any other person to purchase or sell such securities. Where there is any other provision of the present Law on governing the purchase of shares of a listed company by a natural person, legal person or any other organization who holds or holds with any other person not less than 5% of the company's shares by means of an agreement or any other arrangement, it shall prevail. Where any insider trading incurs any loss to investors, the actor shall be subject to the liabilities of compensation according to law.
Article 77 Anyone is prohibited from manipulating the securities market by any of the following means:
(1) Whether anyone, independently or in collusion with others, manipulates the trading price of securities or trading quantity of securities by centralizing the advantage in respect of funds, shareholding advantage or utilizing information advantage to trade jointly or continuously;
(2) Where anyone collaborates with any other person to trade securities pursuant to the time, price and method as agreed upon in advance, thereby affecting the price or quantity of the securities traded;
(3) Where anyone trades securities between the accounts under self-control, thereby affecting the price or quantity of the securities traded; or
(4) Where anyone manipulates the securities market by any other means. Where anyone incurs any loss to investors by manipulating the securities market, the actor shall be subject to the liabilities of compensation according to law.
Article 78 It is prohibited for state functionaries, practitioners of the news media as well as other relevant personnel concerned to fabricate or disseminate any false information, thereby seriously disturbing the securities market. It is prohibited for stock exchanges, securities companies, securities registration and clearing institutions, securities trading service institutions and the practitioners thereof, as well as the securities industry association, the securities regulatory body and their functionaries to make any false statement or give any misleading information in the activities of securities trading. The securities market information as disseminated by any media shall be authentic and objective. Any dissemination of misleading information is prohibited.
Article 79 It is prohibited for securities companies as well as their practitioners to commit any of the following fraudulent acts in the process of securities trading, which may injure the interests of their clients:
(1) Violating the entrustment of its client by purchasing or selling any securities on the behalf;
(2) Failing to provide a client with written confirmation of a transaction within the prescribed period of time;
(3) Misappropriating the securities as entrusted by a client for purchase or sale, or the funds in a client's account;
(4) Unlawfully purchasing or selling securities for its client without any authorization, or unlawfully purchasing or selling any securities in the name of a client;
(5) Inveigling a client into making any unnecessary purchase or sale of securities in order to obtain commissions;
(6) Making use of mass media or by any other means to provide or disseminate any false or misleading information to investors; or
(7) Having any other act that goes against the true intention as expressed by a client and damages the interests thereof. Where anyone practices any trickery and thus incurs any loss to the relevant clients, the actor shall be subject to the liabilities of compensation according to law.
Article 80 It's prohibited for any legal person to unlawfully make use of any other person's account to undertake any securities trading. It's prohibited for any legal person to lend its or any other's securities account.
Article 81 The channel for capital to go into the stock market shall be broadened according to law. It's prohibited for any unqualified capital to go into the stock market.
Article 82 It's prohibited for any person to misappropriate any public fund to trade securities.
Article 83 The state-owned enterprises and state-holding enterprises that engage in any transaction of listed stocks shall observe the relevant provisions of the state.
Article 84 When stock exchanges, securities companies, securities registration and clearing institutions, securities trading service organizations as well as their functionaries discover any prohibited activities in securities trading, they shall report such activities to the securities regulation body in time.
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