Circular of the China Securities Regulatory Commission on Seeking Public Comments on the Implementing Measures of the China Securities Regulatory Commission for the Pilot Program for Administrative Reconciliation (Draft for Comment)

Circular of the China Securities Regulatory Commission on Seeking Public Comments on the Implementing Measures of the China Securities Regulatory Commission for the Pilot Program for Administrative Reconciliation (Draft for Comment)

December 19, 2014

In order to implement relevant requirements of the Opinions of the General Office of the State Council on Further Strengthening the Protection of Small and Medium Investors' Legitimate Interests in the Capital Market (Guo Ban Fa [2013] No. 110), the China Securities Regulatory Commission will launch a pilot program for administrative reconciliation in the administrative enforcement of securities and futures laws upon approval by the State Council. For the purpose of properly handling the work relating to administrative reconciliation, the China Securities Regulatory Commission has drafted the Implementing Measures of the China Securities Regulatory Commission for the Pilot Program for Administrative Reconciliation (Draft for Comment) and hereby solicits comments thereon from the public. The public may provide feedback and comments through the following ways and means:

1. Logon to http://www.chinalaw.gov.cn, and submit comments via the "Opinion Solicitation System for Draft Departmental Rules" on the left of the website homepage;

2. Logon to http://www.csrc.gov.cn/pub/newsite/, and submit comments by clicking the "Implementing Measures of the China Securities Regulatory Commission for the Pilot Program for Administrative Reconciliation (Draft for Comment)" under the column of "Solicitation of Public Opinions";

3. Email: flbpublic@csrc.gov.cn; and

4. Mail the comments by post to: Department of Legal Affairs of the China Securities Regulatory Commission at Tower A, Focus Plaza, No. 19 Jinrong Street, Xicheng District, Beijing, China, 100033

The deadline for feedback is January 19, 2015.

Appendix I: Implementing Measures of the China Securities Regulatory Commission for the Pilot Program for Administrative Reconciliation (Draft for Comment)

Chapter I General Provisions

Article 1 In order to pilot administrative reconciliation in the sectors of securities and futures, standardize the implementation of administrative reconciliation, and protect the legitimate rights and interests of investors, these Measures are formulated according to relevant laws and administrative regulations of the State.

Article 2 In these Measures, administrative reconciliation refers to that the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), in the course of conducting investigation and law enforcement for a violation of the laws, administrative regulations and relevant regulatory provisions with regard to securities and futures in which a citizen, legal person or other organization (hereinafter referred to as "administrative counterpart") is suspected of being involved, upon application by the administrative counterpart, reaches an administrative reconciliation agreement with the administrative counterpart through consultation in respect of such matters as correcting the violation of the laws and regulations, eliminating the adverse consequence of such violation, and making administrative reconciliation payment to compensate the loss of investors, and accordingly terminates the procedures for investigation and law enforcement.

Article 3 Administrative reconciliation shall be implemented in accordance with the requirements, procedures and time limit under these Measures.

Article 4 Administrative reconciliation shall be implemented according to the principles of fairness, willingness, consultation and efficiency. The CSRC shall not propose administrative reconciliation to an administrative counterpart actively or do so in disguised form or force an administrative counterpart to conduct administrative reconciliation.

Article 5 The conclusion or performance of an administrative reconciliation agreement shall not damage the interests of the State or the public, and shall not damage the legitimate rights and interests of others.

Chapter II Applicable Scope and Requirements of Administrative Reconciliation

Article 6 Where false representation, inside trading, market manipulation, fraud on customers or other violation of the laws, administrative regulations or the CSRC's provisions regarding securities and futures in which an administrative counterpart is suspected of being involved, which meets the following circumstances, the administrative reconciliation procedures may apply:
1. the CSRC has initiated the case formally and completed necessary investigation procedures, but it is difficult to completely ascertain the facts or legal relation of the case;
2. the adoption of administrative reconciliation is beneficial to reduce disputes, stabilize and define market expectation, and restore market order;
3. the administrative counterpart is willing to take effective measures to compensate investors for their loss resulting from a violation of the laws or regulations in which the administrative counterpart is suspected of being involved; and
4. the case is closed by means of administrative reconciliation, which neither violates the prohibitive provisions of the laws or administrative regulations nor damages the public interest and the legitimate rights and interests of others.
The cases that are investigated and treated by an agency dispatched by the CSRC are not subject to the administrative reconciliation procedures during the pilot period.

Article 7 Where a case is under any of the following circumstances, the CSRC shall not conduct administrative reconciliation with the administrative counterpart:
1.
　　......