Chinese language - Securities Law of the People's Republic of China (revised in 2005)

BIZCHINA / Finance

Securities Law of the People's Republic of China (revised in 2005)

Updated: 2006-04-18 08:56

Article 154 During a period when a securities company is ordered to
suspend its business for rectification, or is designated for trusteeship,
or is being taken over or liquidated, or where any major risk occurs, the
following measures may be adopted to any director, supervisor, senior
manager or any other person of the securities company directly
responsible upon the approval of the securities regulatory authority
under the State Council:
(1) Notifying the export administrative organ to prevent him from
exiting the Chinese territory; and
(2) Requesting the judicial organ to prohibit him from moving,
transferring his properties or disposing his properties by any other
means, or setting any other right to his properties.

Chapter VII Securities Registration and Clearing Institutions

Article 155 A securities registration and clearing institution is a
non-profit legal person that provides centralized registration, custody
and settlement services for securities transactions. The establishment of
a securities registration and clearing institution shall be subject to
the approval of the securities regulatory authority under the State
Council.

Article 156 The establishment of a securities registration and clearing
institution shall fulfill the following requirements:
(1) Its self-owned capital shall be no less than 0.2 billion yuan;
(2) It shall have a place and facilities as required by the services of
securities registration, custody and settlement;
(3) Its major managers and practitioners shall have the securities
practice qualification; and
(4) It shall meet any other requirement as prescribed by the securities
regulatory authority under the State Council. The words "securities
registration and clearing" shall be indicated in the name of a securities
registration and clearing institution.

Article 157 A securities registration and clearing institution shall
perform the following functions:
(1) The establishment of securities accounts and settlement accounts;
(2) The custody and transfer of securities;
(3) The registration of roster of securities holders;
(4) The settlement and delivery for listed securities trading of a stock
exchange;
(5) The distribution of securities rights and interests on the basis of
the entrustment of issuers;
(6) The handling of any inquiry relating to the aforesaid business
operation; and
(7) Any other business operation as approved by the securities
regulatory authority under the State Council.

Article 158 A national centralized and unified operation shall be adopted
for the registration and settlement of securities. The constitution and
operational rules of a securities registration and clearing institution
shall be formulated according to law and shall be subject to the approval
of the securities regulatory authority under the State Council.

Article 159 The securities as held by the relevant holders shall be all
put under the custody of a securities registration and clearing
institution in a listed trading. A securities registration and clearing
institution may not misuse any securities of its clients.

Article 160 A securities registration and clearing institution shall
provide the roster of securities holders as well as the relevant
materials to a securities issuer. A securities registration and clearing
institution shall, according to the result of securities registration and
settlement, affirm the fact that a securities holder holds the relevant
securities and provide the relevant registration materials to a
securities holder. A securities registration and clearing institution
shall guarantee the authenticity, accuracy and integrity of the roster of
securities holders as well as records of transfer registration and may
not conceal, forge, alter or damage any of the aforesaid materials.

Article 161 A securities registration and clearing institution shall take
the following measures to guarantee a sound operation of its business:
(1) Having the necessary service equipment and complete data protection
measures;
(2) Having established complete management systems concerning operation,
finance and security protection; and
(3) Having established a complete risk management system.

Article 162 A securities registration and clearing institution shall keep
the original voucher of registration, custody and settlement as well as
the relevant documents and materials in a proper manner. The term for
keeping the aforesaid materials shall be no less than 20 years.

Article 163 A securities registration and clearing institution shall
establish a clearing risk fund so as to pay in advance or make up any
loss of the securities registration and clearing institution as incurred
from default delivery, technical malfunction, operational fault or force
majeure. The securities clearing risk fund shall be withdrawn from the
business incomes and proceeds of a securities registration and clearing
institution and may be paid by clearing participants according to a
specified percentage of securities trading volume. The measures for
raising and managing the securities clearing risk fund shall be
formulated by the securities regulatory authority under the State Council
in collaboration with the fiscal department of the State Council.

Article 164 The securities clearing risk fund shall be deposited into a
special account of a designated bank and shall be subject to special
management. Where a securities registration and clearing institution
makes any compensation by using the securities clearing risk fund, it may
recourse the payment to the relevant person as held responsible.

Article 165 An application for dissolving a securities registration and
clearing institution shall be subject to the approval of the securities
regulatory authority under the State Council.

Article 166 An investor who entrusts a securities company to undertake
any securities trading shall apply for opening a securities account. A
securities registration and clearing institution shall, according to the
relevant provisions, open a securities account for an investor in his own
name. An investor who applies for opening an account shall hold the
legitimate certificates certifying his identity of a Chinese citizen or
its qualification of a Chinese legal person, unless it is otherwise
provided for by the state.

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