Regulations on Risk Disposal of Securities Companies (Revised in 2016)
Regulations on Risk Disposal of Securities Companies (Revised in 2016)
Regulations on Risk Disposal of Securities Companies (Revised in 2016)
Order of the State Council No.666
February 6, 2016
(Promulgated by the Order of the State Council of the People's Republic of China No.523 on April 23, 2008; and revised in accordance with the Decision of the State Council on Revising Certain Administrative Regulations on February 6, 2016)
Chapter I General Provisions
Article 1 In order to control and neutralize the risk of securities companies, protect the investors' lawful rights and interests and public interests, guarantee the sound development of securities business, the Regulations is hereby formulated in accordance with the Securities Law of the People's Republic of China (hereinafter referred to as the Securities Law) and the Enterprise Bankruptcy Law of the People's Republic of China (hereinafter referred to as the Enterprise Bankruptcy Law).
Article 2 The securities regulatory body under the State Council shall, according to law, undertake the organization, coordination and supervision of the disposal of securities companies' risks.
Article 3 The securities regulatory body under the State Council shall establish the mechanism of coordination and rapid response for the disposal of the securities companies' risks, together with the People's Bank of China, the financial department, the public security department and other financial supervision regulatory agencies of the State Council and the people's governments at the provincial level.
Article 4 During the process of the disposal of securities companies' risks, the related local people's governments shall take effective measures to maintain social stability.
Article 5 During the process of disposal of the securities companies' risks, the normal operation of the stock broking business shall be guaranteed.
Chapter II Suspension for Rectification, Trusteeship, Taking over and Administrative Restructuring
Article 6 Where the securities regulatory body under the State Council finds any serious hidden risks in the securities companies, the said regulatory body may send field working team for risk supervision to conduct special inspection on the securities companies. The said regulatory body shall supervise such operating and managing activities as the transfer of funds, the disposal of assets, the allotment of personnel, the use of seal, the conclusion and performance of contract by the securities companies, etc, and report the relevant situations to the relevant local people's government in time.
Article 7 Where the risk control standard of the securities companies does not comply with the relevant provisions and the securities companies fail to complete rectification within the designated time limit, the securities regulatory body under the State Council may order the securities companies to stop part or all of their operations and undertake rectification. The period of suspension for rectification shall not exceed 3 months.
Where the stock broking operations thereof are ordered to be suspended for rectification, the securities companies may, within the designated time limit, entrust their stock broking operations to the securities companies approved by the securities regulatory body under the State Council for management or transfer their clients to other securities companies. Where the securities companies do not entrust the stock broking operations or transfer the clients according to the requirement overdue, the securities regulatory body under the State Council shall transfer the clients to other securities companies.
Article 8 Where any of the following situations occurs in any securities companies, the securities regulatory body under the State Council may take in trust its stock broking operations concerning the clients. Where the circumstances are serious, the securities regulatory body under the State Council may take over this securities company:
1. The securities company is confused in governance and out of control in management;
2. The securities company embezzles the clients' assets and cannot make up by itself;
3. In the securities trading settlement, the settlement defaults happen several times or the amount of
settlement defaults is relatively large;
4. The standard of risk control does not comply with the stipulations, causing serious financial crisis; or
5. Other situations which may have influence on the continuing operation of the securities company.
Article 9 Where the securities regulatory body under the State Council decides to take in trust the securities companies' stock broking operations concerning the clients, etc., the securities regulatory body under the State Council shall choose securities companies or other professional institutions to establish the trusteeship group according to the established procedure to exercise the operation and management rights of the stock broking operations concerning the clients, etc., of the securities companies in trust.
The trusteeship group shall perform the following duties from the date of trusteeship:
1. The trusteeship group shall ensure that the securities companies' stock broking operations work normally in accordance with the stipulations. If necessary, the trusteeship group shall pay the operating funds and clients' transaction settlement funds in advance in accordance with the stipulations;
2. The trusteeship group shall take effective measures to guarantee the security of the clients' assets during the period of trusteeship;
3. The trusteeship group shall inspect the risks in the securities companies and report to the securities regulatory body under the State Council the emergencies occurring in the process of the operations in time and propose the solution hereto; and
4. The trusteeship group shall perform other duties as requested by the securities regulatory body under the State Council.
The trusteeship time limit shall not exceed 12 months generally. Where the time limit of 12 months expires and the trusteeship really needs to be extended, the securities regulatory body under the State Council may decide to extend the trusteeship time limit, provided that the extended trusteeship time limit shall not exceed 12 months at most.
Article 10 The securities companies in trust shall pay the trusteeship cost and the operating cost during the period of trusteeship. The securities regulatory body under the State Council shall examine and verify the trusteeship cost and the operating cost during the period of trusteeship.
The trusteeship group shall not assume the deficit of the securities companies in trust.
Article 11 Where the securities regulatory body under the State Council decides to take over the securities companies, the securities regulatory body under the State Council shall organize the professional personnel to establish the take-over group according to the established procedures, which shall exercise the operation and management rights of the taken-over securities companies. The principal of the take-over group shall exercise the authority as the legal representative of the taken-over securities companies. The board of shareholders or shareholders' general meeting, board of directors, board of supervisors, manager and assistant manager of the taken-over securities companies shall stop the performance of their duties.
The take-over group shall perform the following duties as of the date of take-over:
1. To take over the securities companies' data of property, seal and account books and documents, etc.;
2. To decide on the managing affairs of the securities companies;
3. To ensure that the securities companies' stock broking operations work normally according to the provisions and to improve the internal control system;
4.
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Order of the State Council No.666
February 6, 2016
(Promulgated by the Order of the State Council of the People's Republic of China No.523 on April 23, 2008; and revised in accordance with the Decision of the State Council on Revising Certain Administrative Regulations on February 6, 2016)
Chapter I General Provisions
Article 1 In order to control and neutralize the risk of securities companies, protect the investors' lawful rights and interests and public interests, guarantee the sound development of securities business, the Regulations is hereby formulated in accordance with the Securities Law of the People's Republic of China (hereinafter referred to as the Securities Law) and the Enterprise Bankruptcy Law of the People's Republic of China (hereinafter referred to as the Enterprise Bankruptcy Law).
Article 2 The securities regulatory body under the State Council shall, according to law, undertake the organization, coordination and supervision of the disposal of securities companies' risks.
Article 3 The securities regulatory body under the State Council shall establish the mechanism of coordination and rapid response for the disposal of the securities companies' risks, together with the People's Bank of China, the financial department, the public security department and other financial supervision regulatory agencies of the State Council and the people's governments at the provincial level.
Article 4 During the process of the disposal of securities companies' risks, the related local people's governments shall take effective measures to maintain social stability.
Article 5 During the process of disposal of the securities companies' risks, the normal operation of the stock broking business shall be guaranteed.
Chapter II Suspension for Rectification, Trusteeship, Taking over and Administrative Restructuring
Article 6 Where the securities regulatory body under the State Council finds any serious hidden risks in the securities companies, the said regulatory body may send field working team for risk supervision to conduct special inspection on the securities companies. The said regulatory body shall supervise such operating and managing activities as the transfer of funds, the disposal of assets, the allotment of personnel, the use of seal, the conclusion and performance of contract by the securities companies, etc, and report the relevant situations to the relevant local people's government in time.
Article 7 Where the risk control standard of the securities companies does not comply with the relevant provisions and the securities companies fail to complete rectification within the designated time limit, the securities regulatory body under the State Council may order the securities companies to stop part or all of their operations and undertake rectification. The period of suspension for rectification shall not exceed 3 months.
Where the stock broking operations thereof are ordered to be suspended for rectification, the securities companies may, within the designated time limit, entrust their stock broking operations to the securities companies approved by the securities regulatory body under the State Council for management or transfer their clients to other securities companies. Where the securities companies do not entrust the stock broking operations or transfer the clients according to the requirement overdue, the securities regulatory body under the State Council shall transfer the clients to other securities companies.
Article 8 Where any of the following situations occurs in any securities companies, the securities regulatory body under the State Council may take in trust its stock broking operations concerning the clients. Where the circumstances are serious, the securities regulatory body under the State Council may take over this securities company:
1. The securities company is confused in governance and out of control in management;
2. The securities company embezzles the clients' assets and cannot make up by itself;
3. In the securities trading settlement, the settlement defaults happen several times or the amount of
settlement defaults is relatively large;
4. The standard of risk control does not comply with the stipulations, causing serious financial crisis; or
5. Other situations which may have influence on the continuing operation of the securities company.
Article 9 Where the securities regulatory body under the State Council decides to take in trust the securities companies' stock broking operations concerning the clients, etc., the securities regulatory body under the State Council shall choose securities companies or other professional institutions to establish the trusteeship group according to the established procedure to exercise the operation and management rights of the stock broking operations concerning the clients, etc., of the securities companies in trust.
The trusteeship group shall perform the following duties from the date of trusteeship:
1. The trusteeship group shall ensure that the securities companies' stock broking operations work normally in accordance with the stipulations. If necessary, the trusteeship group shall pay the operating funds and clients' transaction settlement funds in advance in accordance with the stipulations;
2. The trusteeship group shall take effective measures to guarantee the security of the clients' assets during the period of trusteeship;
3. The trusteeship group shall inspect the risks in the securities companies and report to the securities regulatory body under the State Council the emergencies occurring in the process of the operations in time and propose the solution hereto; and
4. The trusteeship group shall perform other duties as requested by the securities regulatory body under the State Council.
The trusteeship time limit shall not exceed 12 months generally. Where the time limit of 12 months expires and the trusteeship really needs to be extended, the securities regulatory body under the State Council may decide to extend the trusteeship time limit, provided that the extended trusteeship time limit shall not exceed 12 months at most.
Article 10 The securities companies in trust shall pay the trusteeship cost and the operating cost during the period of trusteeship. The securities regulatory body under the State Council shall examine and verify the trusteeship cost and the operating cost during the period of trusteeship.
The trusteeship group shall not assume the deficit of the securities companies in trust.
Article 11 Where the securities regulatory body under the State Council decides to take over the securities companies, the securities regulatory body under the State Council shall organize the professional personnel to establish the take-over group according to the established procedures, which shall exercise the operation and management rights of the taken-over securities companies. The principal of the take-over group shall exercise the authority as the legal representative of the taken-over securities companies. The board of shareholders or shareholders' general meeting, board of directors, board of supervisors, manager and assistant manager of the taken-over securities companies shall stop the performance of their duties.
The take-over group shall perform the following duties as of the date of take-over:
1. To take over the securities companies' data of property, seal and account books and documents, etc.;
2. To decide on the managing affairs of the securities companies;
3. To ensure that the securities companies' stock broking operations work normally according to the provisions and to improve the internal control system;
4.
......