Commenting On Improving The Legal System And Promoting The Registration System Of Gem

Lou Qiuqin (vice president of Criminal Defense Research Institute of Zhongnan University of Economics and Law, senior partner of Beijing Dacheng Law Firm)

The trial registration system for gem is another reform of the domestic capital market after the founding of the science and technology board. It is also an important measure to carry out the newly revised Securities Law for the implementation of the securities issuance registration system. Compared with the approval system, registration system only conducts formal examination of the declared materials submitted by the securities issuers, but does not substantially examine the value of the securities themselves and the profits of the issuers of securities, so that the issuing time and the issuing price are independently determined by the enterprises and the market.

In order to give full play to the expected effect of registration system, we must rely on a sound information disclosure system and be supplemented by supporting systems. Xiao Bing, chief executive officer of Da Chen Chi Zhi, once said: "the most important thing in registration system is to increase the cost of breach of contract. If we do not modify the supporting laws, the registration system of gem will backfire and even become a huge disaster."

Combined with the current legal situation, the author believes that the following aspects should be done as soon as possible so as to help the registration system of gem enter a more stable and long-term way.

First, do well the connection between criminal law and securities law.

The new securities law has added special provisions to the core of registration system reform, namely, information disclosure, and has significantly increased the illegal cost of securities, such as raising the administrative penalty amount substantially. According to the illegal income, the penalty standard has increased from one to five times to one to ten times, and the implementation of fixed penalty has increased from the highest 600 thousand yuan to the highest 2000. Ten thousand yuan. Moreover, the object of administrative penalty extends to the controlling shareholder and the actual controller.

In addition to improving the intensity of administrative penalties, the new securities law has perfected the civil liability system and the representative litigation system, reflecting and improving the administrative responsibility and civil liability of securities violations.

However, the criminal law, as the most severe means of sanctions in the legal sanctions system, is seriously out of step with the current securities law. The fine stipulated in the criminal law is far lower than the fine stipulated in the securities law. We should know that the judicial organs should not only bear the burden of proof, but also reach a very high standard of proof, and they need to invest a large amount of prosecution costs, but in the end, even if they constitute a crime of illegal disclosure and non disclosure of important information, they can only be sentenced to three years' imprisonment and liable to a fine of more than 20 thousand yuan or less than 200 thousand yuan. This is far below the minimum penalty of 500 thousand yuan for administrative penalties.

If the relevant provisions of the criminal law are not amended in time, and the securities law will be joined as soon as possible, the criminal sanction means of securities law breaking will fail. It will not only be able to effectively and effectively crack down on securities crimes, but also play a deterrent role in the illegal activities of securities, and will also be harmful to the construction of the legal system in the securities field.

Second, do well in the connection between supervision and punishment afterwards.

The new securities law has significantly increased the cost of breaking the law. If the issuer or the relevant principal violates the relevant provisions of the securities law, he will be severely punished by the administration or bear the corresponding civil liability for compensation, and there may be no chance of turning over again. But we know that once such a result occurs, whether issuers or investors or other market players will lose the market, all parties will pay huge costs, such as time cost, opportunity cost, labor cost and financial cost. Therefore, punishment is not the ultimate goal of law, and more importantly, deterrence is not easy for market players to commit crimes.

Under the registration system, although the regulatory bodies no longer carry out the prior substantive review, they do not mean deregulation, but shift the focus of supervision and strengthen the dynamic supervision in the matter. For example, we should strengthen the dynamic and timely supervision of information disclosure, conduct risk rating and control on all subjects, take different regulatory concerns on the subjects of different risk levels, strengthen information supervision by using Internet technology and big data, enhance market transparency, and track and monitor the information and transaction information of capital flows.

The link between good supervision and ex post punishment is conducive to maintaining the security of China's financial market and ensuring the healthy development of the securities market.

Third, do well the link between external supervision and internal control.

External supervision helps to reduce the chance of breaking the law, but it is a fundamental measure to prevent illegal risks by building a reasonable internal control compliance mechanism within the enterprise, such as building a compliance culture, setting up compliance goals, building a compliance organization, assessing compliance risks, and testing compliance measures. The establishment of an effective compliance management system can prevent enterprises and their personnel from violating relevant laws, regulations and rules, and avoid severe legal sanctions. For a securities company, a sound risk management and internal control system is a prerequisite for its establishment. The new securities law stipulates that if the compliance management of a securities company fails to comply with the regulations, it will be ordered to make corrections within a specified time limit or be taken to restrict business activities and restrict dividend distribution. The link between external supervision and internal control should be done well, so that enterprises can actively comply with regulations, and can help orderly implementation of registration system.

Fourth, do well the link between legal provisions and practical operations.

In practice, if the regulatory body needs to examine whether it meets the statutory requirements, it should not only examine the truthfulness, accuracy and completeness of the information disclosure, but also make substantive judgments on the enterprises. That is not the real registration system.

The transformation of approval system to registration system is not completed overnight. We need to judge the market risk and need the follow-up and improvement of the matching system. Therefore, the specific scope and implementation steps of the registration system for securities issuance shall be stipulated by the State Council. At present, the gem registration system should be implemented in the pilot stage after the founding of the science and technology board. It is necessary to link up the legal provisions with the practical operation, avoid adding additional conditions through window guidance, and accumulate experience for the full implementation of the registration system, so as to promote the healthy and orderly development of the securities market.

It should be said that the implementation of registration system reform is a grand systematic project, which needs to do well in various aspects. As Chen Wei, chairman of Orient Fuhai, said, behind the registration system reform is the change of regulatory philosophy, but the orderly implementation of registration system also requires the market participants of listed companies and regulators to create a good market order.

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