China Securities Regulatory Commission Decree No. 39

 

The “Regulatory Measures for Professional Qualifications of Directors, Supervisors and Senior Management of Securities Companies”, discussed and approved at the 192nd Chairman’s Meeting of the China Securities Regulatory Commission (CSRC), is hereby promulgated and shall become effective from December 1, 2006 onwards.

 

CSRC Chairman: Shang Fulin
November 30, 2006

 

Regulatory Measures for Professional Qualifications of Directors, Supervisors and Senior Management of Securities Companies

 

Chapter I General Provisions

Article 1 The Measures is enacted to standardize the regulation of professional qualifications of directors, supervisors and senior management of securities companies, improve the professional quality of directors, supervisors and senior management and ensure the legal compliance operation of securities companies according to relevant stipulations in laws and administrative regulations including the “Company Law”, the “Securities Law” and the “Law on Administrative Licenses”.

 

Article 2 The Measures is applicable to the regulation of professional qualifications of directors, supervisors and senior management of securities companies.

The senior management of securities companies (hereinafter referred to as the senior management) mentioned in the Measures refers to general managers, deputy general managers, finance directors, compliance directors, secretaries to directorates, persons in charge of domestic branches and personnel actually fulfilling the duties of the aforesaid positions.

Members of securities companies’ committees performing the obligation of operation and management, executive committees and similar institutions are senior management.

 

Article 3 Directors, supervisors and senior management of securities companies shall obtain the professional qualifications from the China Securities Regulatory Commission (CSRC) before taking the positions.

A securities company shall not appoint the personnel without professional qualifications to hold the positions of directors, supervisors or senior management and shall not break the regulations to authorize the personnel without professional qualifications to actually perform the duties.

 

Article 4 Directors, supervisors and senior management of securities companies shall observe laws, administrative regulations and the CSRC’s rules and regulatory documents and comply with the company’s Articles of Association and industry rules with honesty and diligence.

 

Article 5 The CSRC shall conduct supervision and management on directors, supervisors and senior management of securities companies.

The professional qualifications of directors, supervisors and senior management of securities companies shall be verified and approved by the CSRC according to laws. They can also be verified and approved by agencies of the CSRC (hereinafter referred to as the agencies) upon authorization from the CSRC according to laws.

 

Article 6 The Securities Association of China and the securities exchanges shall conduct the self-discipline management towards directors, supervisors and senior management of securities companies.

 

Chapter II Requirements of Professional Qualifications

 

Section I Basic Requirements

Article 7 Anyone who is under one of the following circumstances shall not take the position of director, supervisor or senior management of a securities company:

(1) the circumstances stipulated in Clause 2 of Article 131, Article 132 and Article 133 of the “Securities Law”;

(2) not more than 3 years after the expiration of the executive period for the administrative penalty imposed by the financial regulatory authority due to severe illegal activities;

(3) not more than 3 years since the day when the professional qualification is cancelled by the CSRC;

(4) not more than 2 years since the day when one is recognized as an improper person by the CSRC; and

(5) other circumstances as recognized by the CSRC.

 

Article 8 In order to obtain the professional qualification of director, supervisor or senior management of a securities company, the following basic requirements shall be met:

(1) being of honesty, integrity and good behavior; and

(2) being familiar with securities laws, administrative regulations, rules and other regulatory documents and having the operation and management ability necessary for performing the duties.

 

Section II Requirements of Professional Qualifications of Directors and Supervisors

Article 9 In order to obtain the professional qualification of director or supervisor, in addition to the basic requirements stipulated in Article 8 of the Measures, the following requirements shall be met as well:

(1) engaging in the work of securities, finance, law and accounting for more than 3 years or the work of economy for more than 5 years; and

(2) having the educational background of junior college or higher.

 

Article 10 In order to obtain the professional qualification of independent director, in addition to the basic requirements stipulated in Article 8 of the Measures, the following requirements shall be met as well:

(1) engaging in the work of securities, finance, law and accounting for more than 5 years;

(2) having the educational background of university graduate or higher and bachelor degree or higher; and

(3) having time and energy necessary for the performance of the duties.

 

Article 11 An independent director shall not have related relation or interest conflict with the securities company and shall not be under any other circumstances which might interfere with the independent and objective judgments.

The following personnel shall not take positions of independent directors of securities companies:

(1) the personnel taking positions in the securities companies or the companies’ related parties, their relatives and the personnel having major social relations with them;

(2) the personnel taking positions in the following institutions, their relatives and the personnel having major social relations with them: units holding or controlling more than 5% equity of the securities companies, the top five shareholder units of the securities companies and the institutions having business or interest relations with the securities companies;

(3) the natural person holding or controlling over 1% equity of a listed company, the natural person shareholder in the top 10 shareholders of a listed company, or the natural person controlling over 5% equity of the securities company and the close relatives of the aforesaid personnel;

(4) the personnel providing services of finance, law and consultation for the securities company and its related parties and their relatives;

(5) the personnel once under any of the aforesaid four circumstances in the past one year;

(6) the personnel taking positions except the independent director in other securities companies; and

(7) other personnel as recognized by the CSRC.

 

Article 12 In order to obtain the professional qualification of chairman of directorate, vice chairman of directorate or chairman of board of supervisors, in addition to the basic requirements stipulated in Article 8 of the Measures, the following requirements shall be met as well:

(1) engaging in the work of securities for more than 3 years, the work of finance, law and accounting for more than 5 years or the work of economy for more than 10 years;

(2) having the educational background of university graduate or higher, or bachelor degree or higher; and

(3) passing the qualification test approved by the CSRC.

 

Section III Requirements of Professional Qualifications of Senior Management

Article 13 In order to obtain the professional qualification of general manager, deputy general manager, financial director, compliance director, secretary to directorate, or members of a securities company’s management committee, executive committee and similar institutions (hereinafter referred to as executives), in addition to the basic requirements stipulated in Article 8 of the Measures, the following requirements shall be met as well:

(1) engaging in the work of securities for more than 3 years or the work of finance, law and accounting for more than 5 years;

(2) having the qualification for securities business;

(3) having the educational background of university graduate or higher, or bachelor degree or higher;

(4) once holding the position of officer in charge of a department of a securities institution for not less than 2 years or officer in charge of a department of a financial institution for not less than 4 years, or having management experience on the position at the same level; and

(5) passing the qualification test approved by the CSRC.

 

Article 14 In order to obtain the professional qualification of officer in charge of a branch, in addition to the basic requirements stipulated in Article 8 of the Measures, the following requirements shall be met as well:

(1) engaging in the work of securities for more than 3 years or the work of economy for more than 5 years;

(2) having the qualification for securities business; and

(3) having the educational background of university graduate or higher, or obtaining bachelor degree or higher

 

Section IV Other Requirements

Article 15 A legal representative of a securities company shall have the qualification for engaging in securities business;

 

Article 16 A director, supervisor or other personnel of a securities company performing the duties of senior management shall obtain the professional qualification for senior management.

 

Article 17 If a person, who has been engaged in the work of securities for more than 10 years or once held the position above the officer in charge of a department of a financial institution for more than 8 years, applies for the professional qualification of chairman of directorate, vice chairman of directorate, chairman of board of supervisors and senior management of a securities company, the degree requirement can be loosened to junior college.

 

Article 18 If a person holding a master degree or higher in securities, finance, economic management, law, accounting or investment applies for the professional qualification of director, supervisor or senior management of a securities company, the year limit of engagement in securities, finance, economy, law and accounting can be loosened properly.

 

Article 19 If personnel, who have taken the positions in securities regulatory institutions, self-discipline institutions and other professional regulatory positions undertaking the function of securities regulation for more than 8 years, apply for the professional qualifications of senior management, they can be exempted from the requirements of qualifications for securities business.

 

Chapter III Application and Verification

 

Section I Application and Acceptance

Article 20 An application for the professional qualification of chairman of directorate, vice chairman of directorate and chairman of board of supervisors shall be submitted to the CSRC by the securities company where the applicant plans to take the position while an application for the professional qualification of manager-level personnel shall be submitted to the CSRC by the applicant himself/herself or by the securities company where he/she plans to take the position. Moreover, the following materials shall be submitted:

(1) the application form;

(2) the written recommendation opinions of 2 recommenders;

(3) the certificate of identity, educational background and academic degree;

(4) the certificate of passing the qualification test;

(5) the expert opinion of the unit where the applicant once took a position in the last three years;

(6) if the applicant took the position of leading officer in the last three years, the report on off-office audit shall be submitted;

(7) if the applicant took a position in a financial institution in the last three years and fell into the regulation scope, the opinion on regulation issued by the regulatory authorities shall be submitted; and

(8) other materials required by the CSRC.

If the professional qualification of manager-level personnel is applied for, the qualification certificate for securities business shall be submitted as well.

 

Article 21 A recommender shall be the current chairman of directorate, vice chairman of directorate, chairman of board of supervisors or manager-level personnel of a securities company, with the time for taking the position of more than 1 year.

If an applicant or a person who plans to take the position doesn’t have the work experience in securities industry, one of his/her recommenders can be the officer in charge of the unit where the applicant originally worked. If the applicant or the person who plans to take the position is a foreigner, at least one of his/her recommenders shall be the personnel meeting the stipulations in the Measures and the other one of the recommenders can be the senior management of the foreign securities institution where the applicant or the person planning to take the position once worked.

A recommender shall make remarks on whether the applicant or the person planning to take the position is under the circumstances listed in Article 7 of the Measures and issue a definite recommendation opinion on his/her personal conduct, observation of laws and regulations, professional experience, business ability, management capacity and others.

A recommender can recommend 3 persons at most to apply for the professional qualification of chairman of directorate, vice chairman of directorate, chairman of board of supervisors or manager-level personnel of a securities company every calendar year.

 

Article 22 An application for the professional qualification of director and supervisor excluding chairman of directorate, vice chairman of director and chairman of board of supervisors shall be submitted by the securities company where the applicant plans to take the position to the local CSRC agency with the jurisdiction over the place where the securities company makes registration, with the following materials submitted:

(1) the application form;

(2) the recommendation opinions of the securities company or the shareholder unit;

(3) the certificates of the identity, educational background and academic degrees;

(4) the expert opinion of the unit where the applicant once took the position in the last three years; and

(5) other materials required by the CSRC.

 

Article 23 A shareholder unit shall issue the recommendation opinion on their recommended candidates for director and supervisor. A securities company shall issue the recommendation opinion on the candidates for independent director and the director and supervisor who are employee representatives. A recommendation opinion shall include the following contents at least:

(1) the fact whether the person planning to take the position is under the circumstances listed in Article 7 of the Measures;

(2) the information about observation of securities laws, administrative regulations, relevant stipulations of the CSRC and rules of self-discipline organizations by the person who planning to take the position;

(3) the professional ethics and credit performance of the person who planning to take the position;

(4) the management ability and business ability of the person planning to take the position; and

(5) whether the person planning to take the position has enough time and ability to fulfill the duties.

 

Article 24 If a person planning to take the position applies for the professional qualification of independent director, his/her certificate of more-than-five-year working experience in securities, finance, law or accounting and the declaration on independence shall be provided. The declaration shall focus on the fact whether he/she is under the circumstances listed in Article 11 of the Measures.

 

Article 25 If a person, who has obtained the professional qualification of chairman of directorate, vice chairman of directorate or chairman of board of supervisors, takes the position of chairman of directorate, vice chairman of directorate or chairman of board of supervisors in another securities company within 12 months since the day when he/she left the company where he/she took the position before and he/she is not under the circumstances stipulated in Article 7 of the Measures, the company where he/she plans to take the position shall submit the following application materials to the CSRC:

(1) the application form;

(2) the off-office audit report by the company where he/she originally took the position; and

(3) other materials required by the CSRC.

 

Article 26 An application for the professional qualification of officer in charge of a branch shall be submitted by the securities company where the applicant plans to take the position to its local CSRC agency, with the following materials submitted:

(1) the application form;

(2) the recommendation opinion of the securities company;

(3) the certificates of identity, educational background, academic degree and qualification for securities business;

(4) the expert opinion of the unit where the applicant took the position in the last three years;

(5) if the applicant took a position of officer in charge of a branch of a securities company in the last three years, the off-office audit report and the regulation opinion of the local CSRC agency with the jurisdiction over the original branch shall be submitted;

(6) if the applicant took a position in a financial institution in the last three years and fell into the regulation scope, the regulation opinion of the regulatory authorities shall be submitted; and

(7) other materials required by the CSRC.

 

Article 27 If an applicant submits the copies of the certificates of educational background and academic degree, the seal of the issuance unit shall be stamped on the copies. Otherwise, the notarization documents of notary organs or the authentication documents of lawyers shall be issued to prove the consistency between the copies and the original documents. If an applicant submits the degree certificate, higher education diploma or non-diploma education certificate issued by the university or higher education institutions in foreign countries, the Hong Kong and Macao Special Administrative Regions or Taiwan area, the authentication documents of the academic degree of his/her educational diploma made by the educational administrative department of the State Council shall also be submitted.

 

Article 28 The submitted expert opinion of the unit where the applicant took the position in the last three years shall specifically explain the information including the scope of duties, fulfillment of duties and disciplinary punishment of the applicant or the person planning to take the position in his/her former unit.

 

Article 29 The CSRC and relevant agencies shall dispose of the application for professional qualification put forward by an applicant according to Article 32 of the “Law of the People's Republic of China on Administrative Licenses” and relevant regulations of implementation procedures for the CSRC’s administrative license.

 

Article 30 If an applicant is under any of the following circumstances, the CSRC and relevant agencies shall make the decision of no acceptance:

(1) the applicant fails to submit all the supplementation and modification materials of application within 15 days since he/she is informed of supplementing and modifying the materials;

(2) the supplementation and modification materials submitted by the applicant within 15 days are still incomplete or fail to meet the legal forms; and

(3) other circumstances, under which the application cannot be accepted, stipulated by laws, administrative regulations and the CSRC.

 

Section II Examination, Verification and Approval

Article 31 The application materials of the professional qualification of chairman of directorate, vice chairman of directorate, chairman of board of supervisors and manager-level personnel shall be put on record in the CSRC agency with the jurisdiction over the place where the applicant is registered or domiciled within 2 days since the day when the CSRC accepts the application. The agency dissenting from the application for professional qualification of the aforesaid positions shall submit relevant opinion to the CSRC within 5 days since the day when it receives the record keeping materials.

 

Article 32 The CSRC and relevant agencies can inspect or interview the applicant or the one who plans to take the position if necessary.

 

Article 33 If an applicant or the one planning to take the position is under any of the following circumstances, the CSRC can make the decision of terminating the examination and verification:

(1) the death or incapacity of the applicant or the one who plans to take the position;

(2) the termination made by the applicant according to laws;

(3) the withdrawal of application materials required by the applicant;

(4) no further remark or explanation by the applicant on the feedback within the stipulated period;

(5) the applicant or the one who plans to take the position is under investigation of administrative organs for a case suspected of illegal activities;

(6) regulatory measures including operation termination for rectification, custody, take-over and business limitation are imposed on the applicant according to laws;

(7) the applicant or the one who plans to take the position is under investigation of judicial organs for a case suspected of crimes; and

(8) other circumstances recognized by the CSRC.

 

Article 34 The CSRC and relevant agencies shall make the decision of approval or disapproval on the applications for professional qualifications of directors, supervisors and senior management of securities companies within the stipulated period. Explanation for disapproval shall be made.

 

Section III Taking Positions

Article 35 The securities companies shall, according to relevant regulations including the Articles of Associations, handle the procedures for the appointments of their to-be-appointed directors, supervisors and officers in charge of branches within 30 days since the day when the aforesaid personnel obtain the professional qualifications. If the aforesaid personnel neither take relevant positions nor perform their duties in the securities companies within 30 days since the day when they obtain the professional qualifications, their qualifications will become ineffective automatically, with the exception that they have legitimate reasons which are approved by relevant agencies.

 

Article 36 If a securities company appoints and dismisses its directors, supervisors and senior management, it shall make an announcement on relevant personnel change and duty range of senior management in the company within 5 days since the day when the decision is made and report it to the CSRC and relevant agencies, with the following materials submitted:

(1) the decision documents of appointments and dismissals;

(2) the resolutions of the relevant meetings;

(3) the approval documents of the professional qualifications of relevant personnel;

(4) the letter of commitment to honest operation signed by the relevant personnel;

(5) the explanation on the duty range of the senior management; and

(6) other materials required by the CSRC.

If the securities company doesn’t perform the obligations of announcement and report, relevant personnel shall report it to the CSRC or relevant agencies within 2 days.

 

Article 37 If a securities company appoints and dismisses its directors, supervisors and senior management, the CSRC and relevant agencies can make an interview concerning taking the positions with relevant personnel. If the directors, supervisors and senior management appointed by the securities company don’t meet the stipulated requirements, the CSRC and relevant agencies shall order the securities company to change the personnel within the stipulated period.

 

Article 38 The proportion of the oversea personnel holding the manager-level positions in a domestic-funded securities company can reach at most 30% of the total amount of the manager-level personnel, while that in a foreign-shared securities company is 50% at most.

 

Article 39 The senior management of the securities companies can take concurrent positions of directors or supervisors in at most two stake-taken companies of the securities companies. But they shall not take the concurrent positions excluding directors and supervisors, in the aforesaid companies and shall not serve concurrently in other profit-making institutions or engage in other operational activities.

The officers in charge of branches of the securities companies shall not concurrently serve as officers in charge of other branches of the same kind.

Any personnel can take the position of independent director in two securities companies at most.

The concurrent position taking by director, supervisor and senior management of the securities companies shall be reported to the CSRC and relevant agencies within 5 days from the day when the condition takes place.

 

Article 40 The person who obtains the professional qualification of manager-level personnel doesn’t need to apply for the professional qualification again if he/she is to take a position excluding the independent director. The securities company where he/she plans to take a position shall handle the procedures for taking the position according to laws and regulations.

 

Article 41 If a director or supervisor of a securities companies or an officer in charge of a branch leaves office, his/her professional qualification becomes ineffective automatically from the day of resignation.

The following circumstances are not subject to the aforesaid regulation:

(1) a director (excluding independent director) and a supervisor of the same company exchange their positions;

(2) chairman of directorate, vice chairman of directorate and chairman of board of supervisors of the same company change their positions to directors and supervisors, except the independent directors, in the same company; and

(3) an officer in charge of a branch of a securities company changes the position to the officer in charge of other branch of the same company.

 

Article 42 If a securities company changes its legal representative, leading officer and officer in charge of the branch, it shall handle the change procedures for the securities business license within 20 days since the day when relevant appointment decision is made.

 

Chapter IV Regulation and Management

Article 43 The directors, supervisors and senior management of securities companies shall exercise their rights according to the stipulations of laws, administrative regulations and the CSRC as well as the Articles of Association, and shall not authorize any personnel without the professional qualifications to exercise the rights on behalf of them.

 

Article 44 If the division of responsibilities of senior management is adjusted, the securities company shall make the announcement in the company and report it to the CSRC and relevant agencies within 5 days. Meanwhile, the securities company shall inform relevant senior management of the aforesaid issue. If the securities company fails to fulfill the obligations of announcement and report according to regulations, relevant senior management shall report it to the CSRC and relevant agencies within 2 days.

 

Article 45 The directors, supervisors and senior management of securities companies shall refuse to implement the instructions or suggestions made by institutions and individuals which would damage the companies’ interests or the clients’ legal rights and interests. If any illegal activity which damage the clients’ legal rights and interests is found out, it shall be reported to the CSRC and relevant agencies in time.

The CSRC and relevant agencies shall protect the legal rights and interests of the directors, supervisors and senior management who suffer from unfair treatment due to fulfillment of duties and safeguarding of the clients’ interests.

 

Article 46 The directors, supervisors and senior management of the securities companies shall not conduct the following behaviors:

(1) accepting bribes or gaining other illegal income through abuse of power;

(2) the appropriation or embezzlement of the assets of the company or clients;

(3) illegally lending the assets of the company or clients to others; and

(4) providing guarantees for the liabilities of the company, its shareholders or other institutions and individuals with the clients’ assets.

 

Article 47 The CSRC shall conduct annual qualification inspection towards the personnel who have obtained the professional qualifications of manager-level personnel but don’t take the manager level positions in the securities companies.

The aforesaid personnel shall submit the registration forms of annual inspection with opinions signed by officers in charge of their units or their recommenders to the domiciled CSRC agencies in the 1st quarter of every year since the next year after they obtain the professional qualifications.

 

Article 48 The personnel who have the professional qualifications of manager-level personnel but don’t take manager-level positions in securities companies shall re-apply for the professional qualifications of manager-level personnel before taking the positions if they fail to participate in the annual qualification inspection according to regulations, fail to pass the annual qualification inspection or haven’t take positions in securities companies for 5 consecutive years since the day when they obtained the professional qualifications.

 

Article 49 The CSRC shall establish a database to record the information of the personnel obtaining the professional qualifications of manager-level personnel. A securities company can inquiry relevant information from the database when selecting and appointing the management.

The CSRC shall input relevant information of chairman of directorate, vice chairman of directorate and chairman of boards of supervisors of a securities company to the database.

 

Article 50 A person who obtains the professional qualification of director, supervisor or management shall participate in the business training recognized by the CSRC every three years at least and obtain the training certificate.

A person who obtains the professional qualification of officer in charge of a branch shall participate in the business training recognized by the local CSRC agency every three years at least and obtain the training certificate.

 

Article 51 When the chairman of directorate and general manager of a securities company cannot perform their duties or there are vacancies in these positions, the company can, according to the Articles of Association, temporarily appoint the personnel meeting the stipulation of Article 8 to perform the duties and report it to the CSRC and the agency with jurisdiction over the place where the company is registered within 3 days since the day when the decision is made.

If the personnel decided on by a company don’t meet the requirements, the CSRC and relevant agencies can order the company to designate other personnel to perform the duties within the stipulated period and order the original personnel performing the duties to suspend the fulfillment.

Time for temporary duty performing shall not be more than 6 months. A company shall elect and appoint the personnel with professional qualifications to hold the positions of chairman of directorate and general manager.

 

Article 52 If the directors, supervisors and senior management of securities companies are suspected of significant illegal activities and crimes and are involved in cases under investigation by the administrative or judicial authorities, the securities companies shall suspend relevant personnel from their positions.

 

Article 53 In case of any of the following circumstances, relevant CSRC agency shall make regulatory interview with the director, supervisor and senior management who have the direct or leading responsibilities:

(1) the securities company or the person himself is suspected of breaking laws, administrative regulations or stipulations of the CSRC;

(2) there exist great hidden troubles in the securities company’s corporate governance structure and internal control;

(3) the securities company’s financial indicators don’t meet the risk control indicators prescribed by the CSRC;

(4) the securities company appoints the personnel without professional qualifications to take the positions of directors, supervisors and senior management, or violate the Measures to authorize the personnel without professional qualifications to actually perform the aforesaid duties;

(5) going against Articles 36 and 44 of the Measures by failing to fulfill the obligation of announcement;

(6) the directors, supervisors and senior management fail to observe their promises;

(7) disobeying Articles 43, 45, 50 and 52 of the Measures;

(8) the recommended personnel are regarded to be unsuitable or their professional qualifications are cancelled within one year since the day when the recommendation opinion is signed;

(9) there exists false content in the issued opinion on recommendation;

(10) the concealment of the illegal activities of the company and its shareholders, other directors, supervisors and senior management;

(11) failing to conduct dismission audit towards the personnel leaving office; and

(12) other circumstances recognized by the CSRC according to the prudential principle.

 

Article 54 If a securities company fails to make correction towards its non-compliant net assets or other risk control indicators within specified period as ordered by the CSRC, or its activities severely damage the stable operation and the clients’ legal rights and interests, the CSRC can restrict the company’s remuneration payment and welfare supply to its directors, supervisors and senior management, suspend relevant personnel from their positions, or order to change the directors, supervisors and senior management.

The directors, supervisors and senior management shall not leave their positions during the period of position suspension.

 

Article 55 If the directors, supervisors and senior management of a securities company are under any of the following circumstances, the CSRC and relevant agencies can regard them as the unsuitable personnel:

(1) providing false information to and hiding significant events from the securities regulatory authority;

(2) refusing to cooperate with the securities regulatory authority in its fulfillment of regulatory obligation;

(3) absent without leave;

(4) accumulatively imposed with 3 regulatory interviews by the securities regulatory authority according to Article 53 within one year;

(5) accumulatively imposed with 3 disciplinary punishments by the self-disciplinary organization;

(6) having leading responsibilities for the accumulative 3 administrative punishments imposed on the company;

(7) having leading responsibilities for the accumulative 5 disciplinary punishments imposed on the company; and

(8) other circumstances recognized by the CSRC according to the prudential principle.

 

Article 56 A securities company shall not appoint the person recognized as an improper candidate by the CSRC and relevant agencies to take the position of director, supervisor or senior management within 2 years from the day when the recognition is made.

 

Article 57 If the lack of diligence of directors, supervisors and senior management of securities companies leads to the occurrence of severe illegal activities or major risks in the securities companies, the CSRC and relevant agencies may repeal the professional qualifications of relevant personnel and order the securities companies to change their directors, supervisors and senior management within the stipulated period.

 

Article 58 If the person recommended by the recommender is recognized as an improper candidate or his/her professional qualification is repealed within one year since the day when the recommender signs the recommendation opinion, the  recommendation opinion issued by the recommender and the registration form of annual inspection with the recommendation opinion signed by the recommender shall not be accepted within 2 years from the day when relevant decision is made.

 

Article 59 If the chairman of directorate, vice chairman of directorate or senior management resigns, is dismissed from his/her position due to recognition as an improper candidate, or his/her professional qualification is repealed, the securities company shall conduct off-office audit towards him/her and submit the audit report to the CSRC and relevant agencies for recording within 3 months since the day when he/she leaves office.

 

Article 60 During the period of off-office audits, the chairmen of directorate, vice chairmen of directorate and senior management shall not hold positions of director, supervisor and senior management in other securities companies.

 

Chapter V Legal liabilities

Article 61 If the securities company’s directors, supervisors and senior management breaking laws, administrative regulations and provisions of the CSRC shall be imposed with administrative sanctions, the punishment shall be made according to relevant regulations. If they are suspected of committing crimes, they shall be transferred to the judicial authorities to ascertain their criminal responsibilities.

 

Article 62 If an applicant or a person who plans to take the position conceals relevant information or provides false materials to apply for the professional qualification, the securities regulatory authority shall not accept the application or grant the administrative license and shall impose warning on him/her according to laws.

 

Article 63 If an applicant or a person who plans to take the position obtains the professional qualification by unfair means such as cheat and bribe, the professional qualification shall be repealed, with a warning and a fine imposed on both the company and the responsible personnel.

 

Article 64 If a securities company violates the regulations of the Measures to engage the personnel without professional qualifications to take relevant positions, the CSRC shall impose the administrative punishment on it according to Article 198 of the “Securities Law”.

 

Article 65 If there exist any of the following circumstances, order for rectification shall be made. A warning or a fine or both shall be imposed on the company and the responsible personnel:

(1) breach of the provisions in Articles 39, 46 and 51 of the Measures;

(2) failure in conducting corresponding treatment for the regulatory requirements made by the CSRC according to Articles 37 and 56; and

(3) failure in performing the obligation of report by the company or relevant senior management, or existence of false record, misleading statement or major omission in the submitted materials.

 

Chapter VI Supplementary Provisions

Article 66 The persons in charge of a branch mentioned in the Measures refer to the managers and the personnel who actually perform the duties of manager in the branches, securities business departments, securities service departments of securities companies and other non-legal-person institutions which can engage in business and operation as stipulated by the CSRC and affiliated to securities companies.

 

Article 67 The financial work mentioned in the Measure refers to other financial work excluding the securities business.

Engagement in relevant securities work in listed companies shall be deemed as engagement in securities business.

 

Article 68 The periods stipulated in the Measures are calculated based on working days, excluding the legal holidays.

 

Article 69 The Measures shall become effective from December 1, 2006 onwards. The “Interim Administration Measures for Professional Qualifications of Senior Management of Securities Business Institutions” (Zheng Jian Ji Zi [1998] No. 46) and the “Administration Measures for Senior Management of Securities Companies” (CSRC Decree No. 24) promulgated by the CSRC shall be abolished simultaneously.