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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ESTABLISHMENT AND DISSOLUTION OF SECURITIES EXCHANGES CHAPTER III THE FUNCTIONS OF STOCK EXCHANGES CHAPTER IV ORGANIZATION OF A STOCK EXCHANGE CHAPTER V THE SUPERVISION OF SECURITIES TRADING ACTIVITIES BY THE STOCK EXCHANGE CHAPTER VI SUPERVISION AND REGULATION OVER THE MEMBERS BY THE STOCK EXCHANGES CHAPTER VII SUPERVISION AND REGULATION OVER LISTED COMPANIES BY STOCK EXCHANGES CHAPTER VIII THE ORGANIZATIONS OF SECURITIES REGISTRATION AND SETTLEMENT CHAPTER IX ADMINISTRATION AND SUPERVISION CHAPTER X PENALTY PROVISIONS CHAPTER XI SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Measures have been formulated for the purpose of strengthening the administration of securities exchanges, clarifying the powers and responsibilities of the securities exchanges and maintaining the normal order of the securities market. Article 2. The present Measures shall be applicable to the securities exchanges established within the territory of the People's Republic of China. Article 3. The term "securities exchanges" mentioned in the present Measures shall be any of the legal persons that are established under the conditions provided in the present Measures not for the purpose of making profits, but instead for providing business sites and facilities for the concentrated and organized dealings of securities, for exercising the powers provided in the relevant laws, regulations, ministerial rules and policies of the State, and for practicing self-disciplinary administrations. Article 4. The securities exchanges shall be subject to the supervision and administration of the China Securities Regulatory Commission (hereafter CSRC). The securities registration and settlement institutions established by the securities exchanges shall be subject to the supervision and administration of the CSRC. Article 5. The name of a securities exchange shall include the words "securities exchange". No other entity or individual may use the words "securities exchange" in its or his name. CHAPTER II ESTABLISHMENT AND DISSOLUTION OF SECURITIES EXCHANGES Article 6. The establishment of securities exchanges shall be subject to the examination of the CSRC and the ratification of the State Council. Article 7. To establish a securities exchange, the following documents shall be submitted to the CSRC: (1) A letter of application; (2) The articles of incorporation and major draft rules of business operation; (3) A list of the members planning to join the stock exchange; (4) A list of candidates of the council and their resumes; (5) A brief account of the site, facilities and funds; (6) A brief account of the management personnel planned to be appointed; and (7) Other documents that may be required by the SCSC. Article 8. The articles of incorporation of a stock exchange should include the following items: (1) Purpose; (2) Name; (3) Locations of main office and trading site and facilities; (4) Functions; (5) Qualifications of a member and the procedures for entry and withdrawal; (6) Rights and obligations of members; (7) Disciplinary punishment on members; (8) Organizational setup and functions and power; (9) The selection, appointment and removal of senior management personnel and their functions and powers; (10) Capital and accounting; (11) Requirements and procedures for disband; and (12) Other items required in the articles of incorporation. Article 9. The dissolution of a stock exchange shall be subject to the ratification of the State Council after being consented to by the CSRC upon examination. CHAPTER III THE FUNCTIONS OF STOCK EXCHANGES Article 10. A stock exchange is obliged to create an open and fair market environment so as to ensure the normal operation of the stock exchange. Article 11. The functions of a stock exchange shall include: (1) To provide the site and facilities for stock trading; (2) To formulate the rules for stock trading; (3) To accept stock listing applications and make arrangements for stock listing; (4) To organize and supervise the stock trading activities; (5) To exercise supervision and regulation over the members; (6) To exercise supervision and regulation over the listed companies; (7) To establish organizations for the registration and settlement of securities; (8) To manage and publish market information; and (9) To exercise other functions allowed by the SCSC. Article 12. A stock exchange may not be engaged directly or indirectly in any of the following business: (1) Profit-making businesses; (2) Press and publication business; (3) Publishing words and materials for the prediction of securities prices; (4) Providing guaranty for any other party; or (5) Other businesses that are not approved by the CSRC. Article 13. Any new type of securities that are listed in a stock exchange shall be subject to the approval of the CSRC. Article 14. Any stock exchange that provides services for the dealings of the securities that are not listed therein by way of network connections shall be subject to the approval of the CSRC. Article 15. A stock exchange shall formulate and revise operational rules within its own functions. The operational rules formulated or revised by the stock exchange shall be passed at the council of the stock exchange and be submitted to the CSRC for approval. The operational rules of a stock exchange shall incorporate the rules for listing, trading, and membership administration as well as of other activities associated with the trading of securities. CHAPTER IV ORGANIZATION OF A STOCK EXCHANGE Article 16. A stock exchange shall set up a membership congress, a council and sub-committees. Article 17. The membership congress is the supreme agency of power of a stock exchange. It shall exercise the following functions and powers: (1) To formulate and revise the articles of association of the stock exchange; (2) To elect and remove council members; (3) To deliberate and adopt the work reports by the council and the general manager; (4) To deliberate and adopt the reports on financial budgets and final accounts of the stock exchange; and (5) To decide on other major matters of the stock exchange. After the formulated or revised articles of incorporation are adopted by the membership congress, they shall be submitted to the CSRC for approval. Article 18. The membership congress shall be summoned by the council and convened once each year. In any of the following circumstances, a temporary meeting shall be convened: (1) The number of council members falls below the minimum number provided in the present Measures; (2) When one third of all the members so request; or (3) When the council deems it necessary. Article 19. A member congress may not be convened unless two-thirds of the members attend and a decision by the membership congress is valid only when it gets the approval of more than half of the attending members. The stock exchange shall report all the documents of the General Assembly and the situation to the China Securities Regulatory Commission within 10 days after the end of the General Assembly. Article 20. The council is the policy-making organ of a stock exchange. The term of the council is three years. The functions and powers of the council are: (1) To execute the resolutions of the membership congress; (2) To draft and revise the operational rules of the stock exchange; (3) To deliberate and finalize the working plans submitted by the general manager; (4) To deliberate and finalize the budget and final account plans submitted by the general manager; (5) To examine and approve the acceptance of new members of the stock exchange; (6) To examine and finalize punishments to be given to a member; (7) To decide on the setup of sub-committees when it is necessary; and (8) To exercise other functions and powers authorized by the membership congress. Article 21. The council of a stock exchange shall be made up of seven to thirteen persons, with the number of non-membership council members being no less than one-third but no more than one half of the total of the membership council members. The membership council members shall be elected by the membership congress and the non-membership council members shall be nominated by CSRC. A council member is not allowed to serve for more than two successive terms. The council meeting shall be convened at least once each quarter. A council meeting shall be attended by more than two thirds of the members and the resolutions thereof is valid only when it is adopted by at least two-thirds of the votes. The resolutions of the council shall be submitted to the CSRC for archivist purposes within two working days after the completion of the meeting. Article 22. The council shall have a president, one or two vice presidents. The president and vice presidents shall be elected by the council upon the nomination of the CSRC. The general manager shall be a member of the council. Article 23. The president is responsible for calling and presiding over council meetings. In case the president cannot perform his duties due to temporary reasons, a vice-president shall be designated by the president to act on his behalf. The president shall act as the chairman of the membership congress during his terms of office. The president shall not be the general manager of the stock exchange. Article 24. A stock exchange shall have a general manager and one to three deputy general managers. The general manager and deputy managers shall be subject to the appointment and dismissal of the CSRC. No public servant of the state organs may serve as the general or deputy manager. The term of office for the general manager and the deputy general managers shall be three years. The general manager may not hold office for two consecutive terms. The general manager is responsible for the routine operations of the stock exchange under the leadership of the council, and acts as the legal representative of the stock exchange. Should the general manager be unable to perform temporarily due to special reasons, a deputy general manager shall be designated by the general manager to act on his behalf. Article 25. The appointment and dismissal of middle-level cadres of the stock exchanges shall be submitted to the CSRC for archivist purposes, and the appointment and dismissal of the persons-in-charge of departments of finance and personnel shall be subject to the ratification of the CSRC. Article 26. A supervisory committee shall be established under the council for a term of three years. The chairman of the supervisory committee shall be the president of the council. The supervisory committee shall be responsible to the council, exercising the following functions and powers: (1) Supervising the observance of the relevant laws, regulations, ministerial rules, policies of the state or the articles of incorporation and operational rules of the stock exchange by the senior management or other staff of the stock exchange; (2) Supervising the execution of the resolutions of the membership congress and the council by the senior management of the stock exchange; (3) Supervising the financial affairs of the stock exchange; and (4) Exercising the functions and powers provided in the articles of incorporation of the stock exchange. Article 27. The council may, where it is necessary, establish other special sub-committees. The functions and duties, term of office and member constituency, of each sub-committee shall be prescribed in the articles of incorporation of the stock exchange. The expenditure of the sub-committees shall be included in the budget of the stock exchange. Article 28. No one of any of the following circumstances may be employed as a staff member of the stock exchange or serve as a member of the senior management of the stock exchange: (1) Having committed a crime of corruption, bribery, misappropriation of property, embezzlement of property or the crime of disrupting the social economic order or having been deprived of political rights due to criminal offenses; (2) Within five years after any staff member of a securities management organizations or other financial institutions that has been removed from his or her position; (3) Within five years after any lawyer, certified accountant or any professional of a legitimate asset appraisal institution or asset assessment institution is disqualified; (4) Within five years after any legal representative of a company or enterprise is held to be personally responsible for the revocation of the business license thereof; (5) Within five years after any director, head or manager who is held to be personally responsible for the bankruptcy of the company or enterprise; (6) Within five years after a worker of any state organ is kicked off; or (7) Any other circumstances provided in the relevant laws, regulations, ministerial rules or policies of the state. Article 29. In case any member of the senior management of a stock exchange is unconscionably produced or employed, or the aforesaid member has committed any act of violating any of the provisions of the relevant laws, regulations, ministerial rules or rules of the state or the articles of incorporation or the operational rules of the stock exchanges during his term of office, or the aforesaid member is held to be unsuitable for further holding his position due to other reasons, the CSRC shall be entitled to remove the said person from his position and appoint other persons to assume the position. CHAPTER V THE SUPERVISION OF SECURITIES TRADING ACTIVITIES BY THE STOCK EXCHANGE Article 30. A stock exchange shall formulate specific rules for business operations. The operational rules shall contain the following contents: (1) The types and times periods of the securities to be traded; (2) The ways and procedures of securities trading; (3) The acts prohibited in the trading of securities; (4) The issues of settlement and liquidation; (5) The settlement of trading disputes; (6) The suspension, resumption and cancellation of the trading of listed securities; (7) The opening, closing and suspension of business of the stock exchange and the handling of abnormities; (8) Collection of trading commissions and other relevant fees and the rates thereof; (9) Provisions concerning the handling of violations of the operational rules; (10) Provision and management of the market information of the stock exchange; (11) The formulation and publication of stock indices; and (12) Other items required to be provided for in the operational rules of a stock exchange. Article 31. A stock exchange shall publish up-to-the minute market information and work out tables of the market information on the daily basis, specifying the following contents for making public in appropriate ways: (1) Name of the securities listed; (2) The prices at the opening, at the peak, at the lowest and at closing; (3) The rise or fall compared to the prices at closing of the previous day; (4) Itemized and aggregate amounts and values of transactions; (5) Securities indices and the rises and falls thereof; and (6) Other items required by the CSRC to be made public. Article 32. A stock exchange shall make a daily report, weekly report, monthly report and annual report of the transactions therein and make them public all in good time. Article 33. A stock exchange shall formulate detailed provisions in the operational rules for the securities trading contracts to take effect and be rescinded, and shall maintain the validity of the securities trading contracts concluded therein. Article 34. A stock exchange shall ensure that all investors have equal opportunities to acquire the information about the market situation of the securities market and other information that has been made public and that they have equal opportunities of trading. Article 35. A stock exchange shall be entitled to decide on the temporary suspension, resumption or cancellation of trading of listed securities in accordance with relevant provisions. Where the temporary suspension of securities trading is longer than a trading day, it shall be submitted to the CSRC for archivist purposes; where the suspension of securities trading is longer than 5 trading days, it shall be submitted to the CSRC beforehand for ratification. The CSRC shall be entitled to demand the stock exchanges to suspend or resume the trading of listed securities. Article 36. A stock exchange shall establish the system of market entrance, and restrict or prohibit the securities trading of certain securities investors pursuant to the provisions of laws and regulations on securities or the requirement of the CSRC. Unless in the circumstances provided in the preceding paragraph, no stock exchange may restrict or prohibit the securities trading of securities investors. Article 37. The stock exchanges and the members thereof shall properly keep the materials of entrustment, records of dealings, liquidation documents, etc. that have been produced in the securities trading process, and shall formulate corresponding administrative measures for inquiry and keeping secret. A stock exchange shall prescribe the time period for keeping the above-mentioned documents according to their specific needs which shall be submitted to the CSRC for ratification. The important document shall be kept for no less than 20 years. Article 38. A stock exchange shall ensure that the operational rules thereof be seriously executed and that the violations of the operational rules be handled in good time. With regard to the violations of laws, regulations or rules provided in the relevant laws, regulations, ministerial rules or policies of the state, the stock exchanges shall be responsible for discovering, stopping and reporting to the higher authorities, and shall be entitled to make investigations within their respective functions and powers. Article 39. The stock exchanges shall establish a computer system that satisfies the requirements for the supervision, regulation and real-time monitoring of the securities market, and shall establish a special organization to be in charge of the supervision and regulation of the securities market. The CSRC may demand the establishment of information exchange systems and joint supervision and monitoring systems among the stock exchanges for the purpose of supervising and regulating the securities market so as to jointly supervise and regulate the inter-market unfair trading activities and to control the risks of the market. CHAPTER VI SUPERVISION AND REGULATION OVER THE MEMBERS BY THE STOCK EXCHANGES Article 40. A stock exchange shall formulate specific rules for the administration of the members thereof, which shall include the following contents: (1) The conditions and procedures for becoming a member; (2) Measures for administering seats; (3) Requirements concerning the internal supervision of members, risk control, and the criteria and maintenance of computers that are connected with the trading of securities and liquidation; (4) The system of reporting business by members thereof; (5) The code of conduct concerning the behavior of the representatives designated by the members within the stock exchanges; (6) Punishments to be given to the members and the representatives thereof within the stock exchanges for their violations of laws or rules; and (7) Other matters that need to be specified in the rules concerning the administration of members. Article 41. The members that a stock exchange accepts shall be the intra-territorial securities management institutions that are established upon the approval of competent authorities and that have the status of a legal person. The representative offices set up by the extraterritorial securities management institutions within China may apply to be special members of the stock exchanges. The qualifications, rights and obligations of the special members shall be provided in the articles of incorporation of the stock exchanges. Article 42. After deciding to accept or dismiss a member, the stock exchange shall, within five working days after the decision is made, report to the CSRC for archivist purposes. To accept or dismiss any member apart from the official members, the stock exchanges shall, five days prior to going through relevant formalities, report to the CSRC for archivist purposes. Article 43. The stock exchanges shall set a limit to the number of the seats of securities trading. The setup of any seats apart from the ordinary seats shall be subject to the ratification of the CSRC. To make readjustments to the number of ordinary seats and other seats apart from the ordinary ones, the stock exchanges shall report beforehand to the CSRC for ratification. Article 44. The stock exchanges shall exert rigorous administration over the seats obtained by the members thereof. The transfer of any seat by any of the members shall be subject to the approval of the stock exchanges concerned according to the relevant administrative rules of the stock exchanges. It is strictly forbidden to have all or some of the seats used by any other institution or individual by way of lease or contracted management. Article 45. The stock exchanges shall implement the following supervisions and regulations over the self-run business of the members according to the provisions of the state concerning the administration over the self-run businesses of the securities by the securities management institutions and the operational rules of the stock exchanges: (1) Demanding the members to run the self-run business through special stock accounts and capital accounts and exerting rigorous administration by advanced technological means; (2) Inspecting to see if the members that have established accounts for self-running have met the qualifications for self-running; (3) Demanding the members to work out statements of repertory securities on the monthly basis which shall be reported to the stock exchange prior to the fifth of the subsequent month; (4) Making specified risk control measures concerning the self-running businesses and report them to the CSRC for archivist purposes; (5) Reporting to the CSRC within 30 days after June 30 and December 31 of each year about the situation of the self-run business of the members up to the deadline; and (6) Other matters of supervision and regulation. Article 46. The stock exchanges shall make detailed provisions in the operational rules concerning the securities businesses bought or sold by the members on behalf of the clients, and exert the following supervisions and regulations: (1) Formulating a exemplary agency agreement for the members to enter into with their clients, and inspect the legitimacy of the agreements concluded; (2) Prescribing the procedures and duties for the members to accept the entrustment of their clients, and make regular selective examinations over the execution of the entrustments of the clients; and (3) Demanding the members to submit reports about their respective dealings and complaints from their clients within five days after each month is over. The format and content of the reports shall be promulgated by the stock exchanges after being ratified by the CSRC. Article 47. The stock exchanges shall make selective or comprehensive inspections over the members concerning their rules regarding financial standing and internal risk control and their observance of the relevant regulations of the state and the operational rules of the stock exchanges, and report the results of inspections to the CSRC. Article 48. The stock exchanges shall be entitled to demand their members to provide the statements, account books, trading records and other documents and materials relating to their businesses. Article 49. The members of the stock exchanges shall accept the supervisions and regulations of the stock exchanges and make active answers to relevant interrogations. Article 50. The stock exchanges may give sanctions to the members thereof for their violations according to the articles of incorporation or operational rules. CHAPTER VII SUPERVISION AND REGULATION OVER LISTED COMPANIES BY STOCK EXCHANGES Article 51. The stock exchanges shall formulate detailed rules of listing according to the provisions of relevant laws, administrative regulations, which shall include the following contents: (1) The conditions for the listing of securities and the procedures for application and approval as well as the content and format of the agreements for listing; (2) The contents and format of the listing announcements; (3) The qualifications, liabilities and obligations of the sponsor of securities listings; (4) The ways and rates of collecting fees for listing and other relevant fees; (5) Provisions concerning the handling of violations of the rules of listing; and (6) Other matters that should be prescribed in the rules of listing. Article 52. The stock exchanges shall enter into listing agreements with the listed companies so as to determine the rights and obligations of the parties concerned. The contents and format of the listing agreements shall be consistent with the relevant provisions of the laws, regulations, ministerial rules and policies of the state, and shall be submitted to the CSRC for archivist purposes. All the listing agreements entered into between the stock exchanges and the listed companies shall be uniform in content and format. Where it is necessary to include special clauses with any listed companies, they shall be reported to the CSRC for ratification. A listing agreement shall include the following contents: (1) Items and amounts for collecting listing fees; (2) Technical services provided by the stock exchanges to the companies for the issuance and listing of securities; (3) Demanding the companies concerned to assign special persons to be in charge of the securities; (4) The reporting procedures of regular and interim reports of the listed companies as well as the specific provisions concerning the answering the interrogations of the stock exchanges; (5) Suspension of the listing of securities; (6) The handling of breach of listing agreements by either party; (7) Arbitration clauses; and (8) Other contents that the stock exchanges find necessary to be specified in the listing agreements. Article 53. The stock exchanges shall set up a sponsor system for stock listing to ensure that all listed companies satisfy the requirements of listing and that the sponsors guide the listed companies in their performance of obligations after listing. The stock exchanges shall supervise the sponsors in their performance of relevant duties and obligations provided in the operational rules. Any sponsor that fails to perform its duties or obligations according to the stipulated provisions shall be given a penalty by the stock exchange concerned according to the relevant provisions of the operational rules. Article 54. The stock exchanges shall verify the prospectus for rationed shares, and listing announcements, of the listed companies as well as the public statement documents that are directly connected with the listing of securities, and shall see to it that they are make public in good time. The stock exchanges may request the listed companies or the sponsors of listing to make supplementary statements regarding the aforesaid documents and make them public. Article 55. The stock exchanges shall urge the listed companies to formulate and publish annual reports and midterm reports according to the stipulated time limit for reporting and the uniform formats worked out by the CSRC, make inspections after their publication and, if finding any problems, handle them in good time according to relevant provisions. The stock exchanges shall, within 20 working days after the expiration of the time period for reporting, report the results of inspection to the CSRC. Article 56. The stock exchanges shall verify the interim reports formulated by the listed companies. If the interim report involves any matters that should go through examination and approval procedures provided in the Company Law, the statutes of the state concerning securities and the articles of incorporation, or involves any matters that shall be subject to the approval of the CSRC, the stock exchange concerned shall allow them to be made public after confirming that relevant procedures of examination and approval have gone through. Article 57. In case that any of the following circumstances occurs, the stock exchange concerned shall suspend the trading of the stocks of the listed companies, and demand the listed company concerned to immediately discover relevant information: (1) The trading of the stocks of the company fluctuates abnormally; (2) A public offer has been made by some investor to take over the stocks of the company; (3) The listed company has filed an application for suspending listing according to the listing agreements; (4) The CSRC decides to suspend the trading of the stocks concerned according to relevant legal provisions; or (5) When the stock exchange finds it necessary. Article 58. The stock exchanges shall establish archives for recording the shareholding standing of the listed companies, and, according to the provisions of the relevant laws, regulations, ministerial rules or policies of the state regarding the restrictions about the quantity of shares held by the shareholders and the trading thereof, make timely statistical statements and supervisions over the alterations of shares of the shareholders of the listed companies in the process of securities trading. Where any of the shareholders of any listed company is placed under the obligation of discovering any information due to the alteration of shares held, the stock exchange concerned shall, prior to the discovery of information by the shareholder, restrict the trading of the stocks thereof, urge it to perform its obligations of discovering information in good time, and report immediately to the CSRC. Article 59. The stock exchanges shall take necessary technical measures to separate the shares of the listed companies that have not listed for circulation from those that have already been listed for circulation. Unless approval of the CSRC has been obtained, no stock that has not been allowed to circulate may enter into the trading sector. Article 60. The stock exchanges shall take necessary measures to ensure that the directors, supervisors and managers of the listed companies do not sell the stocks that they hold of the listed company concerned. Article 61. The listed companies shall establish a system of statistical information of the listed companies, report and discover the relevant statistical information in good time according to the requirements of the stock exchanges. Article 62. The stock exchanges may dispose of the listed companies according to the provisions of the above-mentioned listing agreements for their failure perform their obligation of information discovery, and may submit their suggestions to the CSRC for giving penalties to the violations of the securities statutes. Article 63. The stock exchanges shall exert supervisions and regulations over the issuers of other listed securities by referring to the relevant provisions of this present chapter. CHAPTER VIII THE ORGANIZATIONS OF SECURITIES REGISTRATION AND SETTLEMENT Article 64. A stock exchange shall establish an organization for the registration and settlement of securities so as to provide centralized registration, keeping, settlement and payment services for the issuance of securities and trading of securities at the exchange. Article 65. The registered capital of a securities registration and settlement organization shall be no less than 100 million yuan. Article 66. The securities registration and settlement organizations shall provide safe, fair and efficient services to the securities market, and shall accept the supervision of the stock exchanges over their business activities. Article 67. The scope of business and the functions of a securities registration and settlement organization shall be: (1) Registration of shares; (2) Registration of the list of shareholders and the establishment of securities accounts; (3) The keeping and transfer of inscribed securities; (4) The settlement and payment after trading of all types of securities at the stock exchange; (5) The repayment of the principal and payment of corresponding interests of the entrusted securities or the distribution of bonuses, and other agency services; (6) The keeping of the physical securities; (7) Consultation and training services relating to the above-mentioned businesses; and (8) Other business approved by the CSRC. Article 68. The securities registration and settlement organizations shall, within their respective duties and functions, formulate and revise the articles of incorporation and operational rules which shall take effect after approval of the CSRC has been obtained. The appointment and dismissal of the general manager and deputy managers of the securities registration and settlement organizations shall be subject to the ratification of the CSRC. Article 69. The securities registration and settlement organizations shall establish a system for providing centralized registration, keeping, settlement and payment services for the securities listed in the stock exchanges (hereafter referred to the settlement system), shall have necessary computers, telecom facilities, have complete measures for the safe protection and backup of data so as to ensure the safety of the materials of registration, keeping, settlement and payment of securities as well as the safety of the computer and telecom systems. Article 70. The securities registration and settlement organizations may entrust other securities registration and settlement organizations with some of the registration, keeping, settlement and payment services of the listed securities by way of concluding agreements. Article 71. The securities registration and settlement organizations shall enter into business agreements with the stock exchanges, which shall be submitted to the CSRC for archivist purposes. Article 72. The money deposits and reserve funds for liquidation delivered for the purpose of participating in the trading of at the stock exchange shall be deposited in special accounts by the securities registration and settlement organizations. The securities registration and settlement organizations shall specify in the operational rules thereof the uses and rate of payment of the aforesaid funds, and shall exert rigorous management over the aforesaid funds. It shall be rigorously forbidden to overdraw or use the funds for unauthorized purposes. The securities registration and settlement organizations shall establish a guaranty fund for the risks of the settlement system, and establish a complete system of risk management so as to ensure the continuity and safety of the trading, settlement and payment of the securities. The principles for the constitution and use of the guaranty fund for the risks of the settlement system shall be clearly prescribed in the operational rules of the securities registration and settlement organizations. Article 73. The securities registration and settlement organizations shall, on the basis of the service contracts concluded with the issuers of securities, provide regularly or irregularly lists of the holders of securities and other relevant materials to the issuers of securities. Under the conditions of paperless issuance and trading, the lists of the holders of securities provided by the securities registration and settlement organizations are valid certificates for proving the rights and interests of the holders of securities. The securities registration and settlement organizations shall ensure that the lists of the holders of securities are lawful, truthful and integrated. No organ or individual may counterfeit, juggle or destroy any list of the holders of securities or any other relevant materials. Article 74. The securities registration and settlement organizations shall be entitled to refuse any entity or individual to inquire about the lists of the holders of securities or any other relevant materials, except any of the following circumstances arises: (1) The holder of securities makes the inquiry by himself or through any notarized agent; (2) Providing lists of the holders of securities and other relevant materials to the issuers of securities according to the provisions of Article 73 of the present Measures; (3) Inquiries or evidence-taking carried out by the CSRC or the departments authorized thereby, the people's courts, people's procuratorates or other state organs according to the provisions and procedures of relevant laws and regulations. Article 75. The securities registration and settlement organizations shall, according to the provisions of the CSRC, establish and perfect the internal management rules and working procedures concerning the business, financial affairs and safety, which shall be submitted to the CSRC for archivist purposes. The securities registration and settlement organizations shall properly keep the original vouchers produced in the process of securities registration, keeping, settlement and payment, and where necessary, set a time period for keeping the vouchers which shall be subject to the ratification of the CSRC. The important document shall be kept for no less than 20 years. The accounting vouchers and statements shall be dealt with according to the provisions of the department of public finance. Article 76. The provisions of Article 28 of the present Measures shall be applicable by reference to the management and workers of the securities registration and settlement organizations concerning the conditions for assuming positions. Article 77. Where any of the securities registration and settlement organization applies for suspending business or dissolution, it shall go through relevant formalities according to the legal procedures, and shall report to the CSRC for archivist purposes. CHAPTER IX ADMINISTRATION AND SUPERVISION Article 78. No stock exchange may transfer, by any means, its establishment or business permit obtained according to the provisions of the present Measures. Article 79. The senior management of the stock exchanges and the securities registration and settlement organizations shall bear fiduciary duties to the institutions where they work. Where any of the general managers of the stock exchanges or securities registration and settlement organizations leaves his post, the council of the stock exchange concerned shall hire a local auditing bureau or a public certified accountants firm that is eligible to engage in the securities-related business to have an audition concerning the general manager. The auditing organ hired by the stock exchange shall be subject to the ratification of the CSRC. Article 80. No general manager or deputy manager of any stock exchange or securities registration and settlement organization may hold positions concurrently in any other profit-making organization, body or institutions. No non-membership council member or other worker of any stock exchange may hold any position in any of the member companies of the stock exchange. Article 81. No one of the senior management or other workers of any stock exchange or securities registration and settlement organization may disclose or utilize, by any means, any of the insider information, or seek any interest by any means from any member of the stock exchange or any listed company. Article 82. In case any one of the senior management or other worker of any stock exchange or securities registration and settlement organization finds that, in the process of performing his duties, interests of himself or of any of his relatives are involved, he shall withdraw. The specific matters concerning the withdrawal shall be provided in the articles of incorporation or operational rules. Article 83. The various kinds of funds and fees collected by the stock exchanges or securities registration and settlement organizations shall be used in strict conformity with the stipulated purposes. Special rules shall be formulated for the administration for the funds and fees which may not be used for any unauthorized purposes. The balance of revenue and expenditure of the stock exchange may not be distributed to any of the members. The rates and way of collection of the various kinds of fees mentioned above shall be submitted to the department in charge of fee collections for archivist purposes. Article 84. The stock exchanges and securities registration and settlement organizations shall be obliged to report the following: (1) To submit, within three months after each fiscal years ends, financial statements that have been audited by an certified public accountants firm eligible for engaging in the securities business; (2) To submit, within 15 days after each quarter ends or within 30 days after each year ends, a quarterly or yearly work report to the CSRC concerning its business situation and the implementation of relevant laws, regulations, ministerial rules or policies of the state. The yearly work reports shall be submitted to the people's government of the place where the stock exchange is located; (3) To report about other matters provided in relevant laws, regulations, ministerial rules or policies of the state or in the provisions of the present Measures; and (4) To report about other matters required by the CSRC. Article 85. In case any important event occurs, the stock exchange shall report to the CSRC immediately. The term "important event" mentioned in the preceding paragraph shall include: (1) Finding that serious violations of the relevant laws, regulations, ministerial rules or policies of the state have been or may be committed by any securities registration and settlement organization, member of any stock exchange, listed company, securities investor or any employee of the stock exchange; (2) Finding that potential risks of seriously violating the relevant laws, regulations, ministerial rules or policies of the state exist in the securities market; (3) Any matter that is not clearly provided in the relevant laws, regulations, ministerial rules or policies of the state but will have material effect on the securities market has occurred; (4) Any matter for which important decisions have to be made by the stock exchange in the process of implementing the relevant laws, regulations, ministerial rules or policies of the state; (5) Any other matters that the stock exchange believes necessary to be reported; and (6) Any other matter required by the CSRC. Article 86. In case any of the following circumstances occurs, the stock exchange concerned shall report immediately to the CSRC, and at the same time report to the people's government of the place where the stock exchange is located, and shall inform the members thereof and the securities investors in appropriate ways: (1) Anything that will affect the safe operation of the stock exchange occurs; or (2) The business of the stock exchange stops due to force majeure or stops to take technical measures for the sake of maintaining the normal order of the securities market; Article 87. The stock exchanges and securities registration and settlement organizations shall provide information and business documents about the securities market and other relevant data and materials to the CSRC according to the demand of the CSRC. Article 88. The CSRC shall be entitled to demand the stock exchanges to provide relevant materials about their members and the listed companies. Article 89. The CSRC shall be entitled to demand the stock exchanges and securities registration and settlement organizations to revise their articles of incorporation and operational rules. Article 90. The CSRC shall be entitled to send persons to supervise and inspect the business and financial standing or to investigate other relevant matters of the stock exchanges or securities registration and settlement organizations. When making inspections, the supervisors and inspectors mentioned above shall present lawful certification documents. Article 91. In case any stock exchange or securities registration and settlement organization is involved in any lawsuit or any of the senior management thereof is involved in any lawsuit due to execution of duties or should be punished by being removed from his position according to the relevant laws, regulations or ministerial rules, the stock exchange concerned shall report to the CSRC in good time. CHAPTER X PENALTY PROVISIONS Article 92. Any stock exchange that violates the provisions of Article 12 of the present Measures by engaging in any business that has nothing to do with its functions shall be ordered by the CSRC to straighten up; if the offense constitutes a crime, criminal liabilities shall be investigated by the judicial organs. Article 93. Any stock exchange that violates the provisions of Article 13 and 14 of the present Measures shall be ordered by the CSRC to stop the trading of the type of securities and a disciplinary punishment shall be meted to the persons who are held to be responsible. Article 94. Any stock exchange who violates the provisions of the present Measures and fails to execute its duties in the supervision and regulation work or fails to execute its duty of report provided in the present Measures shall be ordered by the CSRC to mend up within a stipulated time period and shall be given a public criticism. Where the circumstances are serious and the normal trading of securities has been affected, the CSRC shall be entitled to order the stock exchange concerned to suspend business within a time period for rectifications. Article 95. In case any securities registration and settlement organization that violates the provisions of the present Measures, the CSRC may order the stock exchange concerned to punish the securities registration and settlement organization according to the business agreements concluded between them, or the punishment may be given by the CSRC according to the relevant provisions of the state. Article 96. In any of the following cases, the CSRC shall mete out administrative punishments including admonition, recording a demerit, recording a special demerit, removing from position, etc. to the senior managers concerned according to the seriousness of their offences, and order the stock exchanges concerned to give disciplinary punishments to the persons-in-charge of the business operating segments. If serious consequences have resulted, it shall be dealt with by the CSRC according to the provisions of Article 29 of the present Measures. If the offence constitutes a crime, the persons who are held to be responsible shall be subject to the investigation of criminal liabilities by the judicial organs: (1) Failing to distribute or implement relevant laws, regulations, ministerial rules or policies of the state or rules, measures or provisions of the CSRC; (2) Showing no responsibility in work and rendering the management in a mess so that relevant business or operational rules become imperfect or unexecuted; (3) Failing to accept the supervision and inspection of the CSRC or failing to cooperate with the CSRC in its supervision and inspection, paying little attention to or failing to report or failing to deal in good time with serious hidden trouble or loopholes found in work; (4) Failing to take effective measures to stop the violations occurred in the stock exchange or failing to deal with the violations effectively. Article 97. Any employee of the stock exchanges shall be obliged to reject any work assigned by any person that violates with relevant laws, regulations, ministerial rules or policies of the state or relevant provisions of the stock exchange, and be obliged to report the details to the leaders at the next higher level and the CSRC. Any one who fails to reject the aforesaid work or rejected but fails to report shall assume relevant responsibilities. Article 98. In case any member of any stock exchange or any listed company violates relevant laws, regulations, ministerial rules or policies of the state or the articles of incorporation or operational rules of the stock exchange, and the stock exchange concerned fails to undertake its supervising and regulating responsibilities, the CSRC shall be entitled to render the stock exchange and the relevant senior management personnel or other person thereof are held to be directly responsible to assume liabilities. Article 99. The stock exchanges shall, within their respective duties, report to the CSRC in good time about the violations of relevant laws, regulations, ministerial rules or policies of the state by the members or listed companies thereof or any other persons. Where the stock exchange is authorized by relevant laws, regulations or ministerial rules of the state to mete out punishments or the stock exchange may give punishments according to the articles of incorporation, operational rules or listing agreements of the stock exchange, it shall be entitled to give punishments according to relevant provisions and report to the CSRC for archivist purposes. If it is provided in relevant laws, regulations or ministerial rules that it is up to the CSRC to give punishments, the stock exchange shall be entitled to suggest the CSRC to give punishments. The CSRC may demand the stock exchanges to give punishments to the members or listed companies thereof. Article 100. In case any stock exchange or the members thereof or any listed company violates the provisions of the present Measures and the persons who are held to be directly responsible or those who have direct interest relationship with the persons who are held to be directly responsible obtains illegal gains or avoids losses by illegal means, such illegal gains or avoided losses shall be confiscated by the CSRC together with a fine of one to three times the illegal gains or losses avoided. CHAPTER XI SUPPLEMENTARY PROVISIONS Article 101. Definitions of the terms mentioned in the present Measures: (1) "Listing" refers to the fact that an issuer, after being approved, puts its stocks at a stock exchange for trading. (2) "Listing announcement" refers to the information-releasing documents made public by a company on relevant matters about the company and the listing of securities, prior to the listing, through a designated newspaper or magazine, according to the relevant laws, regulations, ministerial rules or policies of the state on securities or the operational rules of the stock exchange. (3) "Listing fees" refers to the fees paid according to the operational rules of the stock exchange by an issuer of securities to a stock exchange where its securities are listed. (4) "Listing sponsor" refers to a formal member of a stock exchange who, with the acknowledgment of the stock exchange, assists an issuer of securities to apply for listing. (5) "Seat fees" refers to the fees paid by a member of a stock exchange for the use of its seat according to the articles of incorporation or operational rules of the stock exchange. (6) "Senior management personnel of a stock exchange" refers to the council members, general manager, deputy managers and members of the subcommittees of a stock exchange. (7) "Securities registration and settlement organization" refers to an institution established by a stock exchange not for the purpose of making profits but for providing intermediary securities services like centralized registration, keeping, settlement and payment in the issuance and trading of securities at the stock exchange. The meaning of the terms not defined in the present Measures shall be determined according to the definitions provided in relevant laws, regulations, ministerial rules or policies of the state. Article 102. The power to interpret the present Measures shall remain with the CSRC. Article 103. The present Measures shall take effect as of the day of promulgation, and the Measures for the Administration of Stock Exchanges promulgated by the Securities Committee on August 21, 1996 shall be repealed concurrently. |
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