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Rules on Risk Disposal of Securities Companies
27-07-2009

Decree of the State Council of the People’s Republic of China
No.523

 

The “Rules on Risk Disposal of Securities Companies” was approved by the 6th Executive Meeting of the State Council on April 23, 2008. The State Council hereby makes an announcement. The rules will be implemented as of the day of announcement.

 

Premier Wen Jiabao

April 23, 2008

 

Rules on Risk Disposal of Securities Companies

 

Chapter I General Provisions

 

Article 1 The rules are made in accordance with the “Securities Law of the People’s Republic of China” (the “Securities Law”) and the “Law of the Peoples Republic of China on Enterprise Bankruptcy” (the “Law on Enterprise Bankruptcy”), with the aim to control and dispel the risks of securities companies, protect the legal rights and interests of investors and the public interests and guarantee the healthy development of the securities industry;

 

Article 2 The securities regulatory authorities of the State Council organize, coordinate and supervise the risk disposal of the securities companies according to law;

 

Article 3 The securities regulatory authorities of the State Council shall establish the coordinated cooperation and quick response mechanism concerning disposal of risks of the securities companies together with the People's Bank of China, the financial departments of the State Council, the Public Security departments of the State Council, other financial regulatory authorities of the State Council and the provincial people's governments;

 

Article 4 In the process of disposing of risks of the securities companies, relevant local people's governments shall take effective measures to safeguard the social stability;

 

Article 5 In the process of disposing of risks of the securities companies, the normal operation of the securities brokerage shall be ensured.

 

Chapter II Shutout for Rectification, Custody, Receiving and Administrative  Restructuring

 

Article 6 When the securities regulatory authorities of the State Council discover that there exist great risks and hazards in the securities companies, the on-the-spot work group for risk monitoring shall be sent to conduct special examination of the securities companies and monitor the operation and management activities of the securities companies including transfer of capital, disposal of assets, arrangement of personnel, use of seals and signing and performance of contracts, and make a circular to the relevant local people’s governments in time;

 

Article 7 If the risk control indicators of the securities companies disaccord with relevant regulations and the rectification cannot be completed within the stipulated term, the securities regulatory authorities of the State Council can order the securities companies to suspend some or all the business for rectification. The term of shutout and rectification shall not exceed 3 months.

Once the securities brokerage is ordered to be suspended for rectification, the securities companies can entrust the securities companies approved by the securities regulatory authorities of the State Council with management of their securities brokerage or transfer their clients to other securities companies within the stipulated period. If the securities companies fail to entrust their securities brokerage businesses as required or fail to transfer their clients within the stipulated period, the securities regulatory authorities of the State Council shall transfer the clients to other securities companies;

 

Article 8 If any of the following circumstances happen to the securities companies, the securities regulatory authorities of the State Council can conduct custody of their business involving clients including the securities brokerage; in case of any serious circumstance, the securities regulatory authorities of the State Council can receive the aforesaid securities companies:

chaotic governance and losing control of management;

embezzling clients’ assets and failure in making it up;

repeated settlement default or large amount of settlement default in the securities trading settlement;

indicators of risk control disaccord with relevant regulations and an important financial crisis occurs;

other circumstances that may influence the continuous operation of a securities company.

 

Article 9 When securities regulatory authorities of the State Council decide to carry out custody of securities companies’ business involving clients (including securities brokerage), professional institutions including securities companies shall be selected according to the required procedures to establish custody groups to exercise operation and management power over the business involving clients (including securities brokerage) of securities companies under custody.

The custody groups shall perform duties as follows as of the day of custody:

ensuring normal and legal operation of securities companies’ securities brokerage business, and paying working capital and clients’ trading settlement funds in advance as required if necessary;

taking effective measures to safeguard clients’ assets during the custody period;

inspecting risks existing in securities companies, reporting emergencies occurring in business operation to securities regulatory authorities of the State Council in time and submit proposals of solutions;

other responsibilities to be performed as required by securities regulatory authorities of the State Council.

In general, the custody period shall not exceed 12 months. If the custody needs to be continued upon expiration of 12 months, securities regulatory authorities of the State Council may decide to extend the custody period, which shall not exceed 12 months at most.

 

Article 10 Securities companies under custody shall assume custody fees and operation fees during the custody, and securities regulatory authorities of the State Council shall approve and verify custody fees and operation fees during the custody.

Custody groups do not assume losses of securities companies under custody.

 

Article 11 When securities regulatory authorities of the State Council decide to receive securities companies, receiving groups shall be set up by organizing professionals according to the required procedures, which will exercise operation and management power of securities companies being received. Officers in charge of receiving groups will perform duties of Legal Representatives of securities companies being received, while the shareholders’ meetings or the Annual General Meeting, the Board of Directors, the Board of Supervisors and managers and deputy managers of securities companies being received shall cease to perform duties.

The receiving groups shall perform duties as follows as of the day of taking over:

taking over properties, seals and materials including account books and documents;

making decision on administration of securities companies;

ensuring normal and legal operation of securities companies’ securities brokerage business and improving internal control system;

checking securities companies’ properties, and preserving or retrieving assets according to law;

controlling risks of securities companies and submitting proposals to avoid risks;

inspecting illegal behaviors of securities companies’ relevant personnel;

other responsibilities to be performed as required by securities regulatory authorities of the State Council.

In general, the receiving period is not more than 12 months. If the receiving needs to be continued upon expiration of 12 months, securities regulatory authorities of the State Council may decide to extend the receiving period, which shall not be more than 12 months at most.

 

Article 12 When encountering great risks, securities companies, if the following conditions are met, may apply to carry out administrative restructuring directly with the securities regulatory authorities of the State Council:

financial information is authentic and complete;

local governments at the provincial level or relevant authorities provide supports;

rectification measures are specific and restructuring plans are feasible.

Securities companies under shutout for rectification, custody or receiving which meet the aforesaid conditions may also apply to carry out administrative restructuring with securities regulatory authorities of the State Council.

Securities regulatory authorities of the State Council shall make decision of approval or disapproval within 30 workdays as of the day of accepting applications for administrative restructuring; reasons shall be stated upon disapproval.

 

Article 13 Securities companies carry out administrative restructuring in way of capital injection, equity restructuring, debt restructuring, asset restructuring and merger or in other ways.

The time limit of administrative restructuring usually does not exceed 12 months. If the administrative restructuring fails to be completed upon expiration of 12 months, securities companies can apply for extension of the administrative restructuring period to the securities regulatory authorities of the State Council. However, the extended period for the administrative restructuring shall not exceed 6 months in maximum.

Securities regulatory authorities of the State Council conduct coordination and guidance for the administrative restructuring of securities companies.

 

Article 14 If securities regulatory authorities of the State Council make disposal decisions of ordering termination of business for rectification, custody, receiving and administrative restructuring of the securities companies, they shall make announcements and post these announcements at the business location of the securities companies under disposal.

Disposal decisions shall include relevant issues such as names of the securities companies under disposal, disposal measures, causes and scope.

The disposal day shall be the announcement day of disposal decisions. Disposal decisions are effective when they are announced.

 

Article 15 If securities companies are ordered to terminate business for rectification, custody, receiving and administrative restructuring, their relationship with creditors and debtors shall not change due to disposal decisions.

 

Article 16 If, upon termination of business for rectification, custody, receiving or administrative restructuring, securities companies reach the normal operation conditions within the prescribed time limit, they can resume normal operation upon approval by the securities regulatory authorities of the State Council.

 

Article 17 If upon termination of business for rectification, custody, receiving or administrative restructuring, securities companies still fail to reach the normal operation conditions within the prescribed time limit, yet are able to pay off the debts due, the securities regulatory authorities of the State Council shall revoke their licenses for securities business according to law.

 

Article 18 Those securities companies whose securities licenses are revoked shall stop operating securities business and arrange their customers to other securities companies according to the voluntary principle of their customers. In the process of arrangement, all related parties shall carry out necessary measures to guarantee customers’ securities transaction on the normal track.

In the circumstances such as the failure to arrange the customers by the securities companies whose securities licenses are revoked, securities regulatory authorities of the State Council shall set up administrative liquidating group to liquidate accounts, arrange customers and transfer securities assets according to provisions of Chapter 3 hereof.

 

Chapter III Cancellation

 

Article 19 If securities companies have following situations at the same time, the securities regulatory authorities of the State Council shall directly cancel the registration of such companies:

illegal operation circumstances are especially severe and there exist huge operation risks;

failure in paying off the debts due and inadequate assets to pay off all debts or obviously lack of ability to pay off the debts;

need to use securities investor protection fund.

 

Article 20 If upon termination of business for rectification, custody, receiving or administrative restructuring, securities companies still fail to reach the normal operation conditions within the prescribed time limit, and have circumstances as prescribed in Items 2 and 3 of Article 19 hereof, the securities regulatory authorities of the State Council shall cancel the registration of such securities companies.

 

Article 21 The securities regulatory authorities of the State Council shall make revocation decisions to revoke the registration of securities companies, and shall select professional organizations such as law firms and accounting firms to set up administrative liquidating group according to the regulated procedures, in order to carry out administrative liquidating of such securities companies.

The revocation decision shall be announced, and the disposal day shall be the day of announcement of the revocation decision; the revocation decision takes effect on the day of announcement of such decision.

If administrative liquidation of the securities companies has been conducted by the securities regulatory authorities of the State Council before this rule is implemented, the disposal day shall be the day of the announcement of the administrative liquidation.

 

Article 22 During the administrative liquidation period, officers in charge of administrative liquidating groups shall perform duties of Legal Representatives of securities companies whose registration is revoked.

Administrative liquidating groups shall perform duties as follows:

managing properties, seals and materials including account books and documents;

liquidating accounts, verifying relevant information of assets and liabilities and registering creditors’ rights which meet state regulations;

assisting in identifying and confirming, and purchasing creditors’ rights which meet state regulations;

assisting the administrative institutes of investor protection funds in making up the clients transaction settlement funds;

allocating clients according to the principle of clients’ free will;

transferring securities assets;

other responsibilities to be performed as required by the securities regulatory authorities of the State Council.

Securities assets previously stated refer to securities companies’ assets, such as administration system of computer information, trading system, communication network system and trading booths, needed for maintaining normal operation of securities brokerage.

 

Article 23 The Shareholders’ Meeting or Annual General Meeting, Board of Directors, Board of Supervisors and managers and deputy managers of securities companies whose registration is revoked shall cease to perform their duties.

During the administrative liquidation period, shareholders of securities companies whose registration is revoked shall not arrange liquidation on their own and not participate in administrative liquidation.

 

Article 24 During the administrative liquidation period, businesses involving clients (including securities brokerage) of securities companies whose registration is revoked shall be under custody of the professional institutions including securities companies selected by securities regulatory authorities of the State Council according to required procedures.

 

Article 25 For the related companies established or actually controlled by securities companies, their assets, personnel, finance or businesses mixed with those of securities companies whose registration is canceled shall be listed into the scope of administrative liquidation upon examination and approval by securities regulatory authorities of the State Council.

 

Article 26 Securities companies’ debtor-creditor relationships do not change due to cancellation of their registration.

Interests of securities companies’ liabilities shall cease to be calculated as of the day of revoking securities companies’ registration.

 

Article 27 Results of liquidating securities companies’ accounts by administrative liquidating groups shall be audited by accounting firms with relevant business qualification for securities or futures, and be recognized by securities regulatory authorities of the State Council.

According to results of accounts liquidation recognized by securities regulatory authorities of the State Council, administrative liquidating groups shall apply to the administrative institutes of investor protection funds for capital to make up for clients’ trading settlement funds.

 

Article 28 Administrative liquidating groups shall announce relevant issues that creditors need to register within 10 days as of their establishment.

Creditors meeting relevant state requirements shall apply for creditors’ rights to administrative liquidating groups with relevant certification materials within 90 days since the announcement day; administrative liquidating groups shall make registration according to regulations. Overdue application without valid reasons shall be denied.

Concerning registered creditors’ rights meeting purchase requirements of the state upon identification and confirmation, administrative liquidating groups shall apply for purchase capital and assist in purchase in time according to relevant state regulations; concerning registered creditors’ rights which fail to meet purchase requirements of the state upon identification and confirmation, administrative liquidating groups shall notify applicant creditors.

 

Article 29 Administrative liquidating groups shall transfer securities assets among institutions with qualification for securities business by public ways including bidding invitation and public price inquiry. The scheme of transferring securities assets shall be submitted to securities regulatory authorities of the State Council for approval.

 

Article 30 Administrative liquidating groups shall not transfer assets beyond securities assets, excluding the assets which tend to be devalued and those which easily suffer losses or except other circumstances where the interests of clients and creditors are to be protected (upon approval by securities regulatory authorities of the State Council).

 

Article 31 Administrative liquidating groups shall not pay back the creditors separately, except the following circumstances where the interests of clients and creditors are to be protected:

liabilities arising from the request of the administrative liquidating groups’ to the other party to fulfill contracts that have not been completely performed by both parties;

normal expenditures including workers' payment and social insurance premium payable to maintain normal business operation;

other expenditures arising from the performance of duties by the administrative liquidating groups.

 

Article 32 In order to protect creditors’ interests, upon approval by securities regulatory authorities of the State Council, administrative liquidating groups may apply for carrying out cashing disposal towards securities assets and other assets on which specific enforcement measures such as attachment, detaining and freezing are adopted before disposal, and the capital after cashing shall be frozen.

 

Article 33 Upon examination by securities regulatory authorities of the State Council, administrative liquidation fees shall be paid off from the assets of the securities companies under disposal from time to time.

Administrative liquidation fees previously stated refer to fees needed for managing or transferring securities companies’ properties by administrative liquidating groups, and fees for performing duties and engaging professional institutions by administrative liquidating groups.

 

Article 34 In general, the term for administrative liquidation shall not exceed 12 months. If administrative liquidation is not completed within 12 months, securities regulatory authorities of the State Council may decide to extend term for administrative liquidation, but the maximum extension shall not exceed 12 months.

 

Article 35 During the administrative liquidation, the securities companies under disposal are exempted from administrative fees and taxes as stipulated in administrative regulations such as value-added tax or business tax.

 

Article 36 For securities companies which are ordered to be closed by the securities regulatory authorities of the State Council according to law, if administrative liquidations are required, they shall be carried out with analogue to the relevant provisions of this Chapter. 

 

Chapter IV Bankruptcy Liquidation and Restructuring

 

Article 37 When registration of securities companies is canceled and securities companies are closed according to law, in case of any situation in Article 2 of the “Law on Enterprise Bankruptcy”, after administrative liquidation, securities regulatory authorities of the State Council or administrative liquidating groups entrusted by them may apply for carrying out bankruptcy liquidation of the closed securities companies whose registration is canceled to the people’s courts according to relevant regulations in the “Law on Enterprise Bankruptcy”.

 

Article 38 In case any circumstance in Article 2 of the “Law on Enterprise Bankruptcy” happens to securities companies, securities regulatory authorities of the State Council may directly apply for carrying out restructuring towards these securities companies to the people’s courts.

According to relevant regulations in the “Law on Enterprise Bankruptcy”, securities companies or their creditors may apply with people’s courts to carry out bankruptcy liquidation or restructuring towards securities companies, while the applications shall be submitted to securities regulatory authorities of the State Council for approval according to regulations of Article 129 in the “Securities Law”.

 

Article 39 Concerning securities companies that need not use securities investor protection fund, securities regulatory authorities of the State Council shall revoke their securities business licenses before approving their bankruptcy liquidation, and securities companies shall cease operation of securities business and allocate clients according to Article 18 of the Rules.

Concerning securities companies which need to use securities investor protection fund, securities regulatory authorities of the State Council shall disapprove applications for bankruptcy liquidation of these securities companies or their creditors, and cancel registration of these securities companies according to the provisions of Chapter 3 hereof and carry out administrative liquidation.

 

Article 40 If the people’s court rules on accepting applications of securities companies for restructuring or bankruptcy liquidation, securities regulatory authorities of the State Council may recommend candidates for administrators to the people’s court.

 

Article 41 When securities companies carry out bankruptcy liquidation, administrators may directly make registration concerning registered creditors’ rights during administrative liquidation which fail to meet the purchase requirements of the State.

 

Article 42 If the people’s courts rule on restructuring the securities companies, securities companies or administrators shall submit drafts of restructuring plans simultaneously to creditors’ meetings, securities regulatory authorities of the State Council and the people’s court.

 

Article 43 Within 10 days since each voting groups vote for the draft restructuring plan at creditors’ meeting, securities companies or administrators shall apply to the people’s courts for approving restructuring plans. If restructuring plans involve relevant issues provided in Article 129 of the “Securities Law”, securities companies or administrators shall simultaneously apply to securities regulatory authorities of the State Council for the approval of relevant issues, and securities regulatory authorities of the State Council shall make decision on approval or disapproval within 15 days since receiving the applications.

 

Article 44 If some voting groups vote against the draft restructuring n plan at the creditors’ meeting while the draft restructuring plan meets conditions regulated in Clause II of Article 87 of the “Law on Enterprise Bankruptcy”, securities companies or administrators may apply to people’s courts for approving the draft restructuring plan. If the draft restructuring plan involves relevant issues regulated in Article 129 of the “Securities Law”, securities companies or administrators shall simultaneously apply to securities regulatory authorities of the State Council for approval of relevant issues, and securities regulatory authorities of the State Council shall make decision on approval or disapproval within 15 days since receiving the applications.

 

Article 45 Securities companies shall implement approved restructuring  plans, and administrators shall be responsible for supervision. Upon expiration of supervision, administrators shall submit supervision reports to the people’s courts and securities regulatory authorities of the State Council.

 

Article 46 If relevant issues in restructuring plans fail to be approved by securities regulatory authorities of the State Council, or the restructuring plans fail to be approved by people’s courts, the people’s courts shall rule on terminating restructuring procedures and declare bankruptcy of securities companies.

 

Article 47 Once the procedures for restructuring  are terminated and the people’s court declares the bankruptcy of the securities company, the securities regulatory authorities of the State Council shall make the decision of revoking upon the securities company and the people’s court shall organize bankruptcy and liquidation according to the provisions of the “Law on Enterprise Bankruptcy”. The issues involving taxes shall be implemented according to provisions of the “Law on Enterprise Bankruptcy” and the “Law of the People’s Republic of China concerning Administration of Tax Collection”.

If the people’s court holds that the administrative liquidation of the securities company shall be conducted, the securities regulatory authorities of the State Council shall establish the administrative liquidating group according to provisions of Chapter III hereof, in order to take charge of the account liquidation, assist in identification, confirmation and purchase of the creditor's rights which conform to the state regulations and assist the administrative institutions of investor protection funds in making up the trading settlement capital of clients and transferring securities assets, etc.

 

Chapter V Supervision and Coordination

 

Article 48 The securities regulatory authorities of the State Council fulfill the following responsibilities when disposing of risks of the securities companies:

I. formulating the risk disposal scheme of the securities companies and organizing the implementation;

II. dispatching the on-the-spot work group of risk disposal to supervise and guide the securities companies under disposal, the custody group, the receiving group, the administrative liquidating group, the managers and other institutions and personnel participating in the risk disposal;

III. coordinating the securities exchanges, the securities depository and clearing institutions and the  administrative institutions of investor protection funds, and ensuring the normal operation of the securities brokerage of the securities companies under disposal;

IV. placing case on file for investigation of the securities companies’ illegal behaviors and imposing the punishment;

V. reporting in time the situation of the suspected criminal offences to the public security departments and handing over the suspected criminal cases according to relevant regulations;

VI. reporting the risks of the securities companies and their influence on the social stability to relevant local people’s government;

VII. other duties which shall be fulfilled according to requirements of the laws and administrative regulations.

 

Article 49 In the process of disposing of risks of the securities companies, the suspected criminal cases which fall within the jurisdiction of the public security authorities, shall be investigated and prosecuted under the unified organization of the public security authorities of the State Council. Relevant local people’s government shall provide support and collaboration.

If the on-the-spot work group of risk disposal, the administrative liquidating group and the managers need to inquire, copy the materials related to their work in the materials detained by the public security authorities, the public security authorities shall provide support and collaboration. Once the securities companies enter the bankruptcy procedures, the public security authorities shall hand over the frozen assets involved in cases to the people’s court which has accepted the bankruptcy cases according to law and keep the relevant necessary evidence materials.

 

Article 50 If the securities regulatory authorities of the State Council dispose of the securities companies according to Chapter II and Chapter III hereof, application can be made to the people’s court for termination of the civil litigation procedures or execution procedures with the aforesaid securities companies and their branches as the defendants, the third party and the person subjected to execution.

For the related companies established or actually controlled by securities companies, if their assets, personnel, finance or businesses are mixed with those of securities companies under disposal, securities regulatory authorities of the State Council can make application to the people’s court for termination of the civil litigation procedures or execution procedures with the aforesaid related companies as the defendants, the third party and the person subjected to execution.
During the period of adopting measures stipulated in the aforesaid two articles, apart from the circumstances stipulated in Article 31 hereof, the debts of the securities companies under dispose shall not be paid off separately.

 

Article 51 Once the securities companies under disposal or their related clients may transfer and hide the illegal capital and securities, or the securities companies may violate the provisions hereof to pay back the debts separately, the securities regulatory authorities of the State Council shall prohibit the transfer of capital and securities of relevant capital accounts and securities accounts.

 

Article 52 The local people’s governments of securities companies under disposal and their branches shall assist risk disposal of securities companies according to relevant state regulations,  work outschemes of maintaining social stability, check, prevent and eliminate unstable factors, thus keeping operation of the disposed securities companies in order.

Local people’s governments of the securities companies under disposal and their branches shall organize personnel of relevant units to establish identification and confirmation groups for individual creditors’ rights to identify and confirm the registered individual creditors’ rights according to state regulations.

 

Article 53 The administrative institutions of investor protection funds shall purchase the creditor's rights and make up the trading settlement capital of clients according to the state regulations.

The administrative institutions of investor protection funds can examine the usage of the securities investor protection fund.

 

Article 54 Shareholders, actual controller and creditors of the securities companies under disposal, and organizations and personnel  related to thesecurities companies under disposal shall  assist the risk disposal of the securities companies.

 

Article 55 Directors, supervisors, senior management and other related personnel of the securities companies under disposal shall take proper care of properties, seals, materials including account books and documents and other articles used and managed by them, transfer these articles to custody group, receiving group and administrative liquidating group or administrators according to requirements and assist the investigation by on-the-spot work group, custody group, receiving group and administrative liquidating group of the risk disposal work.

 

Article 56 Custody group, receiving group and administrative liquidating group and those securities companies ordered to terminate business and rectify, and conduct custody and administrative restructuring shall report their work to securities regulatory authorities of the State Council as required.

 

Article 57 Custody group, receiving group and administrative liquidating group and their working staff shall  act with due diligence and faithfully perform their duties.

If shareholders and creditors of the securities companies under disposal have evidences to prove that custody group, receiving group and administrative liquidating group and their working staff fail to preform their duties according to law, they shall make complaints to securities regulatory authorities of the State Council. Upon investigation and  examination, securities regulatory authorities of the State Council shall order the custody group, receiving group and administrative liquidating group and their working staff to rectify or  dismiss them for new ones. 
 
Article 58 Institutions or personnel under any of the following situations are prohibited from participating in the  risk disposal of securities companies:

I. once received criminal punishment or being investigated and prosecuted for  suspected committing crime;

II. being put on record for investigation by administrative departments for suspected severe lawbreaking or once received administrative punishment for not more than 3 years due to severe lawbreaking;

III. still in the non-entry period of the securities market;

IV. weak internal control with significant hidden risks;

V. having interest relations with the handling issues of the securities companies under disposal;

VI. other circumstances that securities regulatory authorities of the State Council confirm institutions or personnel not suitable to participate in the risk disposal of securities companies.

 

Chapter VI Legal Liabilities

 

Article 59 Directors, supervisors and senior management of securities companies who are mainly liable for the company’s being put under disposal, their qualifications for positions shall be suspended for 1 to 3 years; in case of severe circumstances, their qualifications for positions and qualifications for entering securities business shall be revoked, and the measure of banning of securities market entry shall be imposed on them according to regulations:

 

Article 60 If related personnel including directors, supervisors and senior management of the securities companies under disposal are involved in one of the following circumstances, a penalty of 1-2 times the amount of their annual incomes shall be imposed on them and their qualifications for positions and qualifications for entering securities business shall be suspended; in case of severe circumstances, their qualifications for positions and qualifications for entering securities business shall be revoked and a penalty of 2-5 times the amount of their annual incomes shall be imposed on them, and the measure of banning of securities market entry shall be imposed on them according to regulations:

I. refusing to coordinate with on-the-spot work group, custody group, receiving group and administrative liquidating group to perform their duties according to law;

II. refusing to transfer properties and seals or materials including account books and documents to the custody group, the receiving group and the administrative liquidating group;

III. hiding, destroying, and counterfeiting relevant materials or providing false information on purpose;

IV. hiding properties and moving or transferring properties without authorization;

V. disturbing normal operation and management order and business operation of securities companies, thus evoking unsteady factors;

VI. other circumstances including disturbing normal operation of the  risk disposal of securities companies.

If controlling shareholders or actual controllers of securities companies incite directors, supervisors and senior management to break laws as prescribed in the preceding article, a more severe punishment shall be imposed on controlling shareholders or actual controllers according to the previous provision.

 

Chapter VII Supplementary Provisions

 

Article 61 For the securities companies which need to be disbanded due to division and merger or other causes for disbandment as prescribed in the Company’s Articles of Association, they shall apply for disbandment to securities regulatory authorities of the State Council, and attach reasons for disbandment and schemes including transferring securities assets, settling securities business and allocating customers. Upon approval by securities regulatory authorities of the State Council, those securities companies shall be disbanded and liquidated according to law. The process of liquidation shall be supervised by the securities regulatory authorities of the State Council.

 

Article 62 Risk disposal of futures companies shall be implemented with analogue to the provisions hereof.

 

Article 63 This Rule shall be implemented as of the announcement day.



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