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Recently, SZSE held a new leadership election meeting of the second Legal Professional Advisory Committee and the symposium on the legal system of the capital market (hereinafter referred to as the “Meeting”). 18 members from securities regulatory authorities, securities arbitration institutions, colleges and universities, research institutions, law firms, securities companies and investment institutions fully exchanged their opinions and actively offered advice and suggestions.
The Legal Professional Advisory Committee is an important platform for SZSE to adhere to governing and regulating the market in accordance with laws and promoting legal construction in the capital market. The members are from various fields, with both theoretical knowledge and practical experience, and are fully representative. Since its establishment in December 2020, it has been focusing on the frontier of regulation and the services for regulatory needs, proactively supporting policy formulation, guiding regulatory practice and building market consensus, and achieving good results.
At the Meeting, the legal work of SZSE in recent years was notified. First, adhering to “policy development” to make policies and rules more scientific and complete. Under the guidance of the reform of the registration-based IPO system, the reform of key systems such as issuance and underwriting, trading, M&A and restructuring, continuous regulation and delisting has been promoted in an integrated manner. SZSE strengthened the development of supporting rules with a focus on the reform in key areas, such as merger of the Main Board and the SME Board, public offering of REITs, and interconnectivity of depositary receipts. We continuously optimized the system of regulatory rules for listed companies to make it both systematically complete and easy to understand and use. At the same time, SZSE cooperated in the formulation and revision of more than ten laws, regulations and judicial interpretations, including the Securities Law, the Company Law and the Futures and Derivatives Law, and deeply participated in the legal construction of the capital market. Second, practicing “zero tolerance” to make strict crackdowns more precise and powerful. SZSE strictly controlled the access for issuance and listing, rejecting 16 companies in 2022 who failed to meet the conditions for issuance and listing as well as information disclosure requirements, and implementing on-site supervision of 52 IPO projects to prevent “access with deficiencies”. We resolutely fulfilled our entity responsibilities for delisting. In the past three years, SZSE has implemented the compulsory delisting of nearly 40 listed companies to ensure that “all those meeting the conditions should be delisted”. In addition, we have severely punished financial fraud, misappropriation of funds and other violations of laws and regulations. With a focus on the “key minority”, we enhanced disciplinary punishment such as public condemnation and public recognition, further consolidating the strict regulatory foundation. Third, enhancing “transparent legalization” to make front-line regulation more standardized and transparent. SZSE explored the establishment of a legal issuance and listing review mechanism to achieve full disclosure of review criteria, procedures, content, process and results. Since the launch of the comprehensive registration-based IPO system, SZSE has concentrated on a special action of “Three Transparent and Two Improve” to boost transparent review, transparent supervision and transparent service and improve review quality and efficiency and improve the culture of integrity so as to develop a transparent, clean and quality registration system. We have taken the lead in disclosing the standards for disciplinary punishment to the market, clarifying the rules and promoting the basic electronization of the whole procedure for various types of business, such as share transfer agreements. The progress of processing is available in real time and the full text of the regulatory documents is disclosed to widely accept market supervision. SZSE continues to smooth the internal relief mechanisms such as hearings and reviews to provide market players with adequate procedural relief and boost justice through openness.
At the Meeting, a focus was on how to further play the role of the rule of law to serve the development of a modern industrial system, ensure the smooth operation of the comprehensive registration-based IPO system, and continuously enhance the law-based front-line regulation of the exchange. The participating members put forward many constructive suggestions. First, SZSE will further improve the policies and mechanisms for issuance and listing review, issuance pricing, M&A and restructuring, and information disclosure, to support technology innovation more precisely and efficiently, guide the concentration of factor resources in key areas of the modern industrial system, and promote the virtuous circle of “technology - industry - finance”. Second, SZSE will further clarify the boundary of responsibilities of intermediaries under the registration-based IPO system, adhere to the principle of “fairness in punishment”, and promote a reasonable balance of rights and obligations between intermediaries and other market players, while fully considering the characteristics of China’s market environment and development stage to achieve a balance between maintaining market order and boosting industry development. Third, SZSE will further increase legal supply, enhance regulatory collaboration, strengthen the crackdown on the involvement of third parties such as issuers’ related parties, customers, suppliers and financial institutions in financial fraud, and strive to build a “three-in-one” system of civil, administrative and criminal accountability. Fourth, we will further improve the standardization and transparency of our work, and continuously standardize regulatory discretion and enhance regulatory disclosure to fully protect the rights of market players, promote the study and improvement of judicial intervention policies for self-regulation of the exchange with Chinese characteristics, and create a favorable judicial environment for the exchange to perform its regulatory duties based on laws and regulations.
A head of SZSE said that the legal construction of the capital market is a systematic project, which requires the joint efforts of all parties. We will cooperate with all parties in the market to uphold the path of the rule of law in modern capital markets with Chinese characteristics, adhere to the application of legal thinking and legal approach to solve the problems faced in the reform and development of the market, insist on performing the responsibilities of the market organization and management in accordance with laws, and continuously enhance the law-based front-line regulation to effectively maintain open, fair and just market order, protect the legitimate rights and interests of investors, and provide a solid legal guarantee for the construction of a modern capital market with Chinese characteristics.
