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On March 15, the Shanghai Stock Exchange (SSE) and the China Securities Investor Services Center (ISC) held a ceremony via video link to sign the memorandum of understanding on comprehensively strengthening cooperation, aiming at better implementation of the arrangements of the CPC Central Committee, the State Council and the China Securities Regulatory Commission (CSRC) on investor protection, firm adherence to the people-oriented principle of the capital market, and effective protection of the legitimate rights and interests of investors. The SSE and the ISC agreed to cooperate in the area of exercise of shareholders’ rights, dispute resolution, rights protection and litigation, investor education, training for companies and holding investor service forums. The signing of the MoU was also a move made by both sides to thoroughly study and implement the requirements at the 2022 work conference of the CSRC system and the requirements at the investor protection work conference. Among those attending the ceremony were officials and liaison officers of the SSE and the ISC.
Advancing the effective implementation of the philosophy of rational investment and value investment
In his speech, SSE President Cai Jianchun said that promoting rational investment and value investment is the core value orientation for the SSE’s efforts in investor education and protection. In recent years, in accordance with the guidelines of “building the system, non-intervention, and zero tolerance”, the SSE has implemented the requirements for “standing in awe of the market, the rule of law, expertise and investors, and forging synergy in comprehensive support for reform, development and stability of the capital market”. With the unified leadership of the CSRC and the strong support of the ISC and other peer institutions, the SSE has made new progress in investor education and protection. Cai added that to further promote rational investment and value investment, we should continue to make investor education and protection more relevant and effective, integrate the concept of investor protection into different business areas such as IPO review, IPO pricing, trading mechanisms and ongoing supervision, strengthen front-line self-regulation, step up development and market promotion of the ETF products to meet the needs of the investors with different investment and risk preferences, and make effective efforts in education and guidance for different groups of investors holding stocks, bonds, funds, options and public REITs. Cai pointed out that to boost rational investment and value investment, it is necessary to urge the securities companies and other market intermediaries to fully perform their duties. Acting as a bridge linking up investors and fundraisers, the intermediaries, especially securities companies and other firms, shall fully understand their responsibilities as “gatekeepers” and serve well both investment and financing sides. Cai believed that to cultivate rational investment and value investment, it is important to forge synergy and keep up efforts to accelerate the formation of a market ecosystem of “comprehensive investor protection”. Effective investor education and protection is not only the duty of the SSE, but also the shared responsibility of the entire industry and all walks of life. The SSE will work closely with relevant market participants to contribute to the creation of a work pattern advancing “comprehensive investor protection” in all aspects.
Continuously improving the level of “full knowledge of rights, active exercise of rights, and law-based protection of rights”
Huang Yong, Vice Chairman and President of the ISC, said that the effective protection of the legitimate rights and interests of investors, which is of importance to the vital interests of hundreds of millions of families, fundamentally demonstrates the realization of the capital market’s people-oriented nature. In recent years, under the correct leadership of the CPC Committee of the CSRC, and with the strong support of various departments and institutions in the CSRC system, the ISC has always stuck to the people-oriented principle and implemented the concepts of “standing in awe of the market, the rule of law, expertise and investors, and forging synergy in comprehensive support for reform, development and stability of the capital market” and the “comprehensive investor protection”. In addition, encouraging achievements have been made in effectively protecting the legitimate rights and interests of small and medium-sized investors through featured investor protection initiatives such as exercise of shareholders’ rights, rights protection and litigation, dispute resolution and investor education on rights. Huang also said that on the basis of the MoU, the ISC will continue to deepen and expand the cooperation with the SSE and the Shenzhen Stock Exchange (SZSE), in a bid to constantly improve the quality and efficiency of the efforts in investor protection. First, the ISC will actively participate in annual reports of listed companies and other performance briefings, and join hands with the SSE in its construction of an electronic platform for public solicitation of shareholders’ rights. Second, the ISC will improve the working mechanism and exchange information as soon as possible on disciplinary actions, major lawsuits and the like. Third, the ISC will enhance the diversified settlement mechanism for securities and futures disputes, and explore the establishment of a pre-litigation mediation mechanism with listed companies. Fourth, joint efforts will be made in conducting a series of investor education activities and publicity campaigns for typical cases and the development of investor education products. The ISC will continue to improve the level of "full knowledge of rights, active exercise of rights, and law-based protection of rights" of small and medium-sized investors, and advocate the philosophy of rational investment and value investment.
The SSE-ISC cooperation has yielded encouraging results in recent years
In recent years, the SSE and the ISC have made progress in strengthening cooperation in investor protection, investor education, investor services and other areas. First, the function of demonstration for exercise of shareholders’ rights has been increasingly brought into play. The SSE has supported the ISC in exercising shareholders’ rights through performance briefings on listed companies and media briefings on major assets reorganizations. Since 2016, the ISC has exercised rights over SSE-listed companies for more than 1,400 times, focusing on company bylaws, assets restructuring, impairment of goodwill, illegal guarantees and other matters. Second, synergy has been forged continuously in defending the rights for retail investors. The SSE has been active in working with the ISC to make efforts in public interests protection such as dispute resolution, support for litigation, and special representative litigation. Since 2016, the ISC has accepted and mediated more than 2,000 disputes against the SSE-listed companies, provided support in 15 lawsuits, and jointly advanced the implementation of the special representative’s litigation with Kangmei Pharmaceutical Co., Ltd. Third, closer cooperation has been carried out in investor education. In recent years, the two sides have jointly developed a series of investor education programs and held a number of investor education activities along with the “March 15 International Day for Protecting Consumers’ Rights”, the “May 15 Day for Protecting Investors’ Rights” and the Constitution Week, etc. For years, the SSE has supported the ISC in organizing the “Here Come Shareholders”, the Investor Service Forum and other events. Fourth, a regular co-construction mechanism for the www.investor.org.cn website has been established. The SSE has assigned liaison personnel to regularly upload investor education programs and regulatory information, and introduced and promoted the website through various channels. The ISC has regularly shared the website’s data and content with the SSE. Fifth, personnel exchanges have expanded to more fields. The ISC has appointed representatives from the SSE departments such as company supervision, trading monitoring and legal affairs as members of the Expert Committee on Exercise of Shareholding Rights; and the SSE has invited ISC representatives to serve as members of the STAR Market Listing Committee and the Disciplinary Action Committee.
At present, a new round of deepening reforms in the capital market, with full registration system reform at its core, is being carried out in depth, making higher requirements for the protection of investors’ rights and interests. In the context of the reform of the full registration-based issuance system in the capital market, focusing on the high-quality development goal for China’s capital market during the 14th Five-year Plan period, the SSE and the ISC have signed the memorandum of understanding on all-round cooperation, and will deepen the collaboration in the exercise of shareholders’ rights, rights protection and litigation, diversified approach to dispute resolution, investor education, the construction of the official website (www.investor.org.cn), and other fields.
Going forward, both sides will remain true to the original aspiration and continue to fulfill the mission of the capital market, and fully implement the concepts of “standing in awe of the market, the rule of law, expertise and investors, and forging synergy in comprehensive support for reform, development and stability of the capital market” and “comprehensive investor protection”, and give full play to their unique advantages. Focusing on the new issues in the capital market’s reform and development and the protection of investors’ rights and interests, the two institutions will renew the effort to strengthen cooperation, strive to solve practical problems that investors are concerned about, deliver tangible results for investors, and concretely enhance their sense of security and gain.
