What’s new: China’s securities watchdog is soliciting public comment on a new regulation for securities companies intended to improve supervision push them to strengthen corporate governance.
Under the new rules, shareholders and those in control of securities companies would be barred from: false capital contributions and disguised withdrawal of capital contributions; interfering in the operation and management of the company in violation of regulations; forcing the companies or personnel to provide financing or debt guarantees directly or indirectly in violation of regulations; and conducting improper related-party transactions with the company, according to a draft released Friday by the China Securities Regulatory Commission (CSRC).
The rules also emphasize that publicly traded securities companies should improve the investment return mechanism and protect the interests of small and medium-sized investors.
The background: The rules are part of a series of regulatory updates and revisions after China’s new Securities Law came into effective in March 2020, making it necessary to revise regulations to implement the new law.
The original Securities Law was enacted in 1999 and underwent major changes in 2005. Since then, China’s capital markets have developed rapidly, new financial products have emerged, and regulatory methods and mechanisms have changed, making further changes to the law increasingly imperative.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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