JC Master Legal News Issue 973

Key Takeaways for This Issue
The China Securities Regulatory Commission has centrally revised and repealed certain securities and futures regulatory documents.
To implement the Civil Code, the new Securities Law, and the State Council’s requirements related to the “delegation, regulation, and service” reform, the China Securities Regulatory Commission (CSRC) has conducted a review of relevant securities and futures regulatory documents. Following this review, on June 11, 2021, the CSRC issued the “Decision on Amending Certain Securities and Futures Regulations” and the “Decision on Amending or Repealing Certain Securities and Futures Regulatory Documents,” collectively revising or repealing three regulations, five normative documents, and one other type of regulatory document. Meanwhile, the National Equities Exchange and Quotations Company held the inaugural session of the “New Third Board Entrepreneur Training Camp.”
To help listed companies better navigate the opportunities and challenges of the new development paradigm, establish platforms for inter‑company cooperation and exchange, and support their high‑quality growth, the National Equities Exchange and Quotations Company (NEEQ) hosted the inaugural “New Third Board Entrepreneur Training Camp” in Beijing from June 8 to 11. Nearly 60 senior executives from 36 Select Tier companies participated in the event. Zhang Mei, Deputy General Manager of the NEEQ, delivered the opening address.
Continuously deepening the tax administration reform of “delegation, regulation, and service,” and tirelessly boosting the vitality of market entities to support high-quality development.
The State Taxation Administration has resolutely implemented the directives and requirements of the CPC Central Committee and the State Council, vigorously advancing the tax‑administration reform to streamline administration, delegate power, improve regulation, and enhance services, with each year seeing deeper progress and more thorough implementation, thereby effectively boosting the vitality of market entities.
Interim Measures for the Implementation of Recovery and Resolution Plans for Banking and Insurance Institutions
To establish a mechanism for the recovery and resolution of banking and insurance institutions, to prevent and defuse major risks, to ensure the uninterrupted continuation of critical business operations and services, to achieve orderly recovery and resolution, to protect the legitimate rights and interests of financial consumers and the public interest, and to safeguard financial stability, these Interim Measures for the Implementation of Recovery and Resolution Plans for Banking and Insurance Institutions are hereby formulated in accordance with the Banking Supervision and Administration Law of the People’s Republic of China, the Commercial Bank Law of the People’s Republic of China, the Insurance Law of the People’s Republic of China, the Company Law of the People’s Republic of China, and other relevant laws and regulations.

Finance & Capital Markets

The China Securities Regulatory Commission has centrally revised and repealed certain securities and futures regulatory documents.
To implement the Civil Code, the new Securities Law, and the State Council’s requirements under the “delegation, regulation, and service” reform, the China Securities Regulatory Commission (CSRC) has conducted a review of relevant securities and futures regulatory documents. Following this review, on June 11, 2021, the CSRC issued the “Decision on Amending Certain Securities and Futures Regulations” and the “Decision on Amending or Repealing Certain Securities and Futures Regulatory Documents,” effecting a comprehensive package of amendments and repeals to three regulations, five normative documents, and one other type of regulatory document.
The main contents of this round of centralized amendments and repeals are as follows: First, certain provisions in five regulations and normative documents have been revised. These revisions align the relevant provisions with the Civil Code, the new Securities Law, and the State Council’s requirements for “delegation, regulation, and service” reform. Specifically, they further refine the wording related to the classification of civil subjects; adjust references from the Contract Law to the Civil Code; and make corresponding changes to the legal liabilities for misappropriating or treating securities‑office clients’ funds as proprietary assets. Second, four institutional documents, including the “Work Rules of the ChiNext Expert Advisory Committee (Trial),” have been repealed, primarily because regulatory practices have evolved, the matters they governed no longer exist, or they have been superseded by new rules.
Going forward, the China Securities Regulatory Commission will remain officely focused on the overarching principle of “establishing sound institutional frameworks,” further strengthening the foundational systems of the capital market, and conducting regular or targeted reviews and revisions of regulations as appropriate, thereby continuously enhancing the transparency and rule-of-law-based governance of securities regulation.

Decision on Amending Certain Securities and Futures Regulations
To implement the Civil Code, the new Securities Law, and the State Council’s requirements regarding the “delegation, regulation, and service” reform, the China Securities Regulatory Commission has conducted a review of relevant securities and futures regulatory documents and decided to amend certain provisions of three regulations.
I. In Article 65, Paragraph 3 of the Measures for the Pilot Administration of Preferred Shares, “corporate legal person” is amended to “for-profit legal person.”
II. In Article 65 of the Measures for the Administration of Information Disclosure by Non-Listed Public Companies,
“Other organizations” is amended to “unincorporated organizations.”
III. Article 2 of the Measures for the Administration of Client Transaction Settlement Funds is hereby amended from “commercial banks qualified to engage in the custody business of securities transaction settlement funds” to “designated commercial banks engaged in the custody business of securities transaction settlement funds.”
Delete Article 26.
Delete the phrase “public criticism” from Articles 30, 31, 32, 33, 34, and 35 of the original text.
Article 31 is renumbered as Article 30, and Article 33 is renumbered as Article 32. In these articles, the phrase “in cases of serious circumstances, punishment shall be imposed in accordance with Article 193 of the Securities Law” is amended to read: “in cases of serious circumstances, punishment shall be imposed in accordance with Article 208 of the Securities Law.”
Article 34 shall be renumbered as Article 33, and the provision therein reading “In cases of serious circumstances, the qualification to engage in the custody business of securities trading settlement funds shall be revoked” shall be amended to read “In cases of serious circumstances, such matters shall be handled in accordance with Article 87 of the Regulations on the Supervision and Administration of Securities Companies.”
Article 37 is renumbered as Article 36. In paragraph 3, the phrase “commercial banks engaged in the custody of client transaction settlement funds refer to those commercial banks that meet the requirements set forth in these Measures and have been approved by the CSRC to handle the deposit, withdrawal, and transfer of securities trading settlement funds and to perform supervisory functions” is amended to read: “designated commercial banks engaged in the custody of client transaction settlement funds refer to those commercial banks that meet the requirements set forth in these Measures and have been identified and publicly announced by the CSRC and the CBIRC, and which handle the deposit, withdrawal, and transfer of securities trading settlement funds and perform supervisory functions.” In paragraphs 4 and 6, the phrase “commercial banks qualified to engage in the custody of securities trading settlement funds” is amended to read: “designated commercial banks engaged in the custody of securities trading settlement funds.”
In addition, the numbering of provisions in the relevant regulations has been adjusted accordingly.
The Measures for the Pilot Administration of Preferred Shares and two other regulations shall be amended accordingly in accordance with this Decision and re-issued.
Administrative Measures for the Pilot Program on Preferred Shares
(Approved at the 16th Meeting of the Chairman’s Office of the China Securities Regulatory Commission on December 9, 2013, and amended in accordance with the “Decision of the China Securities Regulatory Commission on Amending Certain Securities and Futures Regulations” dated June 11, 2021.)

Chapter 1 General Provisions
Article 1: In order to regulate the issuance and trading of preferred shares and to protect the legitimate rights and interests of investors, these Measures are formulated in accordance with the Company Law, the Securities Law, the State Council’s Guiding Opinions on Launching a Pilot Program for Preferred Shares, and other relevant laws and regulations.
Article 2: For the purposes of these Measures, “preferred shares” refer to a separate class of shares prescribed in addition to the ordinary shares governed by the Company Law. Holders of such shares are entitled to priority over common shareholders in the distribution of corporate profits and residual assets, but their rights to participate in corporate decision-making and management are subject to limitations.
Article 3: Listed companies may issue preferred shares, and non-listed public companies may issue preferred shares through a non‑public offering.
Article 4: The pilot program for preferred shares shall comply with the relevant provisions of the Company Law, the Securities Law, the State Council’s Guiding Opinions on Launching the Preferred Shares Pilot Program, and these Measures, and shall adhere to the principles of openness, fairness, and impartiality, prohibiting fraud, insider trading, and market manipulation.
Article 5 Securities companies and other securities service institutions participating in the preferred stock pilot shall comply with applicable laws and regulations as well as the relevant provisions of the China Securities Regulatory Commission (hereinafter referred to as the CSRC), adhere to industry‑recognized business standards and codes of conduct, and act with honesty and integrity, diligence, and due care.
Article 6: During the pilot period, the issuance of preferred shares with differing priority in dividend distribution and residual asset distribution is prohibited; however, the issuance of preferred shares with alternative terms is permitted. If a single company issues both mandatory‑dividend preferred shares and preferred shares without such a mandatory‑dividend provision, this shall not be deemed to constitute the issuance of preferred shares with differing priority in dividend distribution.
Article 7: Preference shares with identical terms shall enjoy equal rights. For preference shares with identical terms issued in the same offering, the conditions of issuance, the issue price, and the stated dividend rate per share shall be the same; and any unit or individual subscribing for such shares shall pay the same amount per share.
Chapter 2: Exercise of Rights by Preferred Shareholders
Article 8: Companies issuing preferred shares shall, in addition to formulating the relevant provisions of their articles of association in accordance with the “Guiding Opinions of the State Council on Launching a Pilot Program for Preferred Shares,” also clearly set forth in their articles of association, pursuant to these Measures, the rights and obligations of preferred shareholders.
Article 9: After preferred shareholders have received dividends at the agreed dividend rate, they shall be entitled to participate, together with common shareholders, in the distribution of any remaining profits. The company’s articles of association shall clearly specify the proportion and conditions under which preferred shareholders may participate in such profit distribution.
Article 10. In any of the following circumstances, the Company shall notify its preferred shareholders when convening a general meeting of shareholders and shall follow the procedures applicable to the notification of common shareholders as prescribed by the Company Law and the Articles of Association. Preferred shareholders shall be entitled to attend the general meeting of shareholders and to vote separately from common shareholders on the following matters; each preferred share held by them shall carry one vote, provided that the Company’s own preferred shares shall not carry any voting rights:
(1) Amend the provisions in the company’s articles of association relating to preferred shares;
(2) A single or cumulative reduction in the company’s registered capital exceeding ten percent;
(3) Merger, division, dissolution, or change of the company’s legal form;
(4) Issuance of preferred shares;
(5) Other circumstances stipulated in the company’s articles of association.
With respect to the resolutions on the aforementioned matters, in addition to requiring approval by at least two-thirds of the voting rights held by ordinary shareholders present at the meeting (including preferred shareholders whose voting rights have been restored), they must also be approved by at least two-thirds of the voting rights held by preferred shareholders present at the meeting (excluding those preferred shareholders whose voting rights have been restored).
Article 11 The shareholders’ meeting of the Company may authorize the Board of Directors to pay dividends on preferred shares in accordance with the provisions of the Articles of Association. If the Company fails to pay preferred‑share dividends as agreed for three consecutive fiscal years or for two consecutive fiscal years, then, commencing on the day following the approval by the shareholders’ meeting of a resolution to forgo the agreed‑upon distribution of profits for that year, holders of preferred shares shall be entitled to attend the shareholders’ meeting and vote jointly with holders of ordinary shares, with each share of preferred stock conferring voting rights in an amount specified in the Articles of Association.
For preferred shares whose dividends are cumulative to the next fiscal year, voting rights shall be restored upon the company’s full payment of all outstanding dividends. For preferred shares with non‑cumulative dividends, voting rights shall be restored upon the company’s full payment of the current year’s dividends. The company’s articles of association may provide for other circumstances under which voting rights of preferred shares are restored.
Article 12: Preference shareholders shall have the right to inspect the company’s articles of association, the register of shareholders, the bond certificates, the minutes of shareholders’ meetings, the resolutions of the board of directors, the resolutions of the supervisory board, and the financial accounting reports.
Article 13: The repurchase of preferred shares by the issuer may take two forms: the issuer’s right to redeem preferred shares and the investors’ right to sell back preferred shares. The specific conditions for such repurchases shall be set forth in the company’s articles of association and the offering documents. If the issuer exercises its right to redeem preferred shares, it must fully pay all outstanding dividends, except in cases where commercial banks issue preferred shares to replenish capital. Upon repurchase of preferred shares, the total number of outstanding preferred shares shall be correspondingly reduced.
Article 14: Directors, supervisors, and senior management personnel of the company shall report to the company their holdings of the company’s preferred shares and any changes thereto. During their tenure, the number of shares they may transfer in any given year shall not exceed twenty-five percent of their total holdings of the company’s preferred shares. The articles of association may impose additional restrictive provisions on the transfer of the company’s preferred shares held by directors, supervisors, and senior management personnel.
Article 15. Except for matters specified in the State Council’s Guiding Opinions on the Pilot Program for Preferred Shares, when calculating the number of shareholders and shareholding ratios, ordinary shares and preferred shares shall be counted separately.
Article 16: Where the articles of association provide that preferred shares shall bear a fixed dividend rate, the same fixed rate may be maintained throughout the life of the preferred shares, or a specific fixed annual dividend rate may be set, with the rate varying from year to year. Where the articles of association provide that preferred shares shall bear a floating dividend rate, the method for calculating the coupon dividend rate during the life of the preferred shares shall be clearly specified.
Chapter 3: Issuance of Preferred Shares by Listed Companies
Section 1 General Provisions
Article 17: A listed company shall maintain separation from its controlling shareholder or actual controller in terms of personnel, assets, and finances, and shall ensure independence in its organizational structure and business operations.
Article 18: A listed company shall have a sound internal control system that effectively ensures operational efficiency, legal and regulatory compliance, and the reliability of its financial reporting. The effectiveness of such internal controls shall be free from any material weaknesses.
Article 19: When a listed company issues preferred shares, the average annual distributable profit realized over the most recent three fiscal years shall be no less than the annual dividend on the preferred shares.
Article 20: The cash dividend distribution of a listed company over the most recent three years shall comply with its articles of association and the relevant regulatory provisions of the China Securities Regulatory Commission.
Article 21: During the reporting period, the listed company shall have no material accounting violations. For a public offering of preferred shares, the audit reports issued by certified public accountants on the financial statements for the most recent three years must be either standard audit reports or unqualified audit reports with an emphasis-of-matter paragraph; for a private offering of preferred shares, if the audit report on the financial statements for the most recent year is a non‑standard audit report, the matters covered therein must not have a material adverse impact on the company, or any such material adverse impact must have been eliminated prior to the issuance.
Article 22: When a listed company issues preferred shares to raise capital, the proceeds shall be allocated to specific purposes that are consistent with the company’s business scope and operational scale, and such uses shall comply with national industrial policies as well as relevant laws and administrative regulations on environmental protection, land management, and other matters. Except for financial institutions, the funds raised may not be used for financial investments such as holding trading‑type financial assets or available‑for‑sale financial assets, or for lending to others, nor may they be invested, directly or indirectly, in companies whose primary business is the buying and selling of securities.
Article 23: The outstanding preferred shares of a listed company shall not exceed 50 percent of the total number of its common shares, and the amount of funds raised shall not exceed 50 percent of the company’s net assets prior to issuance. Repurchased or converted preferred shares shall not be included in these calculations.
Article 24: For a given issuance, all preferred shares issued by a listed company shall have identical terms and conditions. No further issuance of preferred shares may take place until the current issuance has been fully completed.
Article 25: A listed company shall not issue preferred shares if any of the following circumstances exists:
(1) The application documents for this issuance contain false records, misleading statements, or material omissions;
(2) Has been subject to administrative penalties by the China Securities Regulatory Commission within the past twelve months;
(3) Being subject to criminal investigation by judicial authorities or under investigation by the China Securities Regulatory Commission for suspected violations of laws or regulations;
(4) The rights and interests of the listed company have been seriously infringed upon by its controlling shareholder or actual controller and have not yet been remedied;
(5) The listed company and its subsidiaries have provided unauthorized external guarantees that have not yet been revoked;
(6) The existence of guarantees, litigation, arbitration, significant market scrutiny, or other material matters that could materially and adversely affect the company’s ability to continue as a going concern;
(7) Its directors and senior management personnel do not meet the qualification requirements stipulated in laws, administrative regulations, and rules;
(8) Other circumstances that seriously harm the legitimate rights and interests of investors and the public interest.
Section II Special Provisions for Public Offerings
Article 26 A listed company issuing preferred shares to the public shall meet one of the following conditions:
(1) Its common shares are constituents of the SSE 50 Index;
(2) Acquiring or merging with other listed companies by using publicly issued preferred shares as consideration;
(3) Where the repurchase of common shares is undertaken for the purpose of reducing the registered capital, preferred shares may be issued publicly as a means of payment, or, upon completion of the repurchase plan, preferred shares not exceeding the total amount of the capital reduction resulting from the repurchase may be issued publicly.
If, after the China Securities Regulatory Commission has approved the public issuance of preferred shares, the listed company no longer meets the conditions set forth in paragraph (1) of this Article, it may nevertheless proceed with the issuance.
Article 27: A listed company shall have been profitable for the most recent three fiscal years. When calculating net profit, the lower of the figure after deducting non-recurring gains and losses and the figure before such deductions shall be used as the basis.
Article 28: When a listed company issues preferred shares to the public, it shall stipulate the following matters in its articles of association:
(1) Adopt a fixed dividend rate;
(2) In the presence of distributable after-tax profits, dividends must be distributed to preferred shareholders;
(3) Any shortfall in the full distribution of dividends to preferred shareholders shall be carried forward to the next fiscal year.
(4) After preferred shareholders have received dividends at the agreed dividend rate, they shall no longer participate in the distribution of any remaining profits alongside common shareholders.
Commercial banks issuing preferred shares to replenish capital may enter into separate agreements with respect to the matters set forth in subparagraphs (ii) and (iii).
Article 29: Where a listed company issues preferred shares to the public, it may give priority allocation to its existing shareholders.
Article 30. Except as provided in Article 25 of these Measures, a listed company that, within the most recent thirty-six months, has been subject to serious administrative penalties for violations of laws or administrative regulations pertaining to industry and commerce, taxation, land use, environmental protection, or customs shall be prohibited from publicly issuing preferred shares.
Article 31: When a listed company issues preferred shares to the public, the company, together with its controlling shareholders or actual controllers, shall not have engaged in any conduct that violates public commitments made to investors within the most recent twelve months.
Section III Other Provisions
Article 32: The par value of each preferred share shall be RMB 100.
The issue price and the stated dividend rate of preferred shares shall be fair and reasonable, and shall not prejudice the lawful rights and interests of shareholders or other stakeholders; moreover, the issue price shall not be lower than the par value of the preferred shares.
The price or coupon rate of publicly issued preferred shares shall be determined through market inquiries or other public methods approved by the China Securities Regulatory Commission. The coupon rate of privately placed preferred shares may not exceed the average annual weighted return on equity for the most recent two fiscal years.
Article 33: Listed companies shall not issue preferred shares that are convertible into ordinary shares. However, commercial banks may, in accordance with the capital regulatory requirements for commercial banks, privately place preferred shares that are mandatorily converted into ordinary shares upon the occurrence of a trigger event, subject to compliance with the relevant provisions.
Article 34: A listed company may issue preferred shares through a non‑public offering only to qualified investors as defined in these Measures. The number of subscribers in each offering shall not exceed two hundred, and the cumulative number of subscribers for preferred shares with identical terms shall likewise not exceed two hundred. Where the subscribers include overseas strategic investors, such issuance shall also comply with the relevant regulations of the competent departments under the State Council.
Section IV: Issuance Procedures
Article 35: When a listed company applies to issue preferred shares, the board of directors shall, in accordance with the relevant information disclosure regulations of the China Securities Regulatory Commission, publicly disclose the proposed issuance plan for such preferred shares and, in compliance with the law, adopt resolutions on the following matters and submit them to the shareholders’ meeting for approval.
(1) The issuance plan for these preferred shares;
(2) In the case of a non‑public issuance of preferred shares where the subscribers have been identified, the listed company shall enter into a conditional subscription agreement for preferred shares with the respective subscribers. The subscription agreement shall specify the number of preferred shares the subscriber intends to subscribe for, the subscription price or the pricing methodology, the stated dividend rate or the principles for determining it, as well as other necessary terms. The agreement shall also provide that the subscriber may not participate in the subscription through competitive bidding, and that, once this issuance has been approved by the board of directors and the shareholders’ meeting of the listed company and duly approved by the China Securities Regulatory Commission, the agreement shall become effective.
(3) Where preferred shares are issued through a non‑public offering and the subscribers have not yet been determined, the resolution shall specify the scope and eligibility of the subscribers, the pricing principles, and the number of shares to be issued or the range thereof.
If a controlling shareholder, the actual controller of a listed company, or an affiliate controlled by them participates in the subscription of the preferred shares issued in this non‑public offering, the provisions of paragraph (2) of the preceding clause shall apply.
Article 36: Independent directors of a listed company shall issue a special opinion on the impact of the company’s current issuance on the rights and interests of all categories of shareholders, and such opinion shall be disclosed together with the board resolution.
Article 37: When a listed company’s shareholders’ meeting deliberates on the issuance of preferred shares, it shall vote separately on each of the following matters:
(1) The type and number of preferred shares to be issued in this offering;
(2) The issuance method, the target investors, and the arrangements for allotment to existing shareholders;
(3) The face value, the issue price, or the principles for determining them;
(4) The methods by which preferred shareholders participate in the distribution of profits include: the stated dividend rate or the principles for determining it, the conditions for dividend payment, the manner of dividend disbursement, whether dividends are cumulative, and whether they may participate in the distribution of residual profits, among others.
(5) Buyback provisions, including the conditions, time frame, price and the principles for determining such price, as well as the entity authorized to exercise the buyback option (if any);
(6) Use of Proceeds;
(7) The conditional share subscription agreement entered into between the company and the subscribers (if any);
(8) The term of validity of the resolution;
(9) The proposed amendments to the company’s articles of association regarding policies related to profit distribution, distribution of residual assets, and the restoration of voting rights for preferred shareholders, as well as other relevant provisions applicable to both preferred and common shareholders;
(10) Authorization to the Board of Directors to handle the specific matters related to this issuance;
(11) Other Matters.
The aforementioned resolution shall be adopted by a vote of at least two-thirds of the voting rights held by ordinary shareholders present at the meeting (including preferred shareholders whose voting rights have been restored). If preferred shares have been issued, the resolution must also be approved by at least two-thirds of the voting rights held by preferred shareholders present at the meeting (excluding those preferred shareholders whose voting rights have been restored). Where a listed company issues preferred shares to specific shareholders of the company or their affiliates, any affiliated shareholder shall abstain from voting when the shareholders’ meeting deliberates and votes on the issuance plan.
Article 38: When a listed company convenes a shareholders’ meeting to deliberate on the issuance of preferred shares, it shall provide online voting and may, by other means approved by the China Securities Regulatory Commission, facilitate shareholders’ participation in the meeting.
Article 39: A listed company seeking to issue preferred shares shall be sponsored by a sponsor and submit its application to the China Securities Regulatory Commission. The procedures for application, review, approval, and issuance shall be conducted in accordance with the provisions of the Measures for the Administration of Securities Issuance by Listed Companies and the Measures for the Administration of Securities Issuance and Underwriting. The Issuance Examination Committee shall review the issuance application pursuant to the special procedures set forth in the Measures of the Issuance Examination Committee of the China Securities Regulatory Commission.
Article 40: A listed company issuing preferred shares may apply for a single approval and proceed with issuance in tranches. Except for the stated dividend rate, the terms of each tranche of preferred shares shall be identical. From the date of approval by the China Securities Regulatory Commission, the company shall complete the initial issuance within six months, and the remaining shares shall be issued within twenty-four months. If the time limit specified in the approval document is exceeded, the company must apply to the China Securities Regulatory Commission for re‑approval. The initial issuance shall account for no less than fifty percent of the total number of shares to be issued; the amounts for subsequent issuances shall be determined at the company’s discretion, and the company shall file a record with the China Securities Regulatory Commission within five business days following the completion of each issuance.
Chapter 4: Non‑Public Issuance of Preferred Shares by Non‑Listed Public Companies
Article 41: A non-listed public company issuing preferred shares through a private placement shall meet the following conditions:
(1) Operate in compliance with laws and regulations;
(2) Sound corporate governance mechanisms;
(3) Fulfill information disclosure obligations in accordance with the law.
Article 42: The provisions of Articles 23 and 24 of these Measures.
Article 43: A non-listed public company issuing preferred shares through a private placement shall comply with Articles 24, 25, and 32 of these Measures. Such preferred shares may be offered only to qualified investors as defined in these Measures, with the number of subscribers in each offering not exceeding 200, and the cumulative number of subscribers for preferred shares with identical terms not exceeding 200.
Article 44: Where a non-listed public company intends to issue preferred shares, the board of directors shall, in accordance with the law, adopt resolutions on the specific issuance plan, the impact of this issuance on the rights and interests of all classes of shareholders, the purpose of issuing preferred shares, the intended use of the proceeds, and other matters that must be clearly specified, and shall submit such resolutions to the shareholders’ meeting for approval.
If the board of directors’ resolution specifies particular subscribers, it shall set forth the names of those subscribers, along with the subscription price or pricing methodology, the number of shares to be subscribed, or the range thereof; concurrently, a conditional share subscription agreement shall be executed with the relevant subscribers prior to the board meeting. If the board resolution does not specify particular subscribers, it shall clearly define the scope and eligibility of the subscribers, as well as the pricing principles.
Article 45: When the shareholders’ meeting of a non‑listed public company deliberates on the issuance of preferred shares, the voting procedures shall be conducted in accordance with Article 37 of these Measures. A resolution to issue preferred shares shall be adopted by a vote of at least two-thirds of the voting rights held by ordinary shareholders present at the meeting (including preferred shareholders whose voting rights have been restored). If preferred shares have already been issued, such a resolution must also be approved by at least two-thirds of the voting rights held by preferred shareholders present at the meeting (excluding those preferred shareholders whose voting rights have been restored). Where a non‑listed public company issues preferred shares to specific shareholders of the company or their affiliates, affiliated shareholders shall abstain from voting when the shareholders’ meeting considers the issuance plan, unless the number of the company’s ordinary shareholders (excluding preferred shareholders whose voting rights have been restored) is fewer than two hundred.
Article 46: The application, review (including exemptions), issuance, and other related procedures for the issuance of preferred shares by non-listed public companies shall be conducted in accordance with the Measures for the Supervision and Administration of Non-Listed Public Companies and other relevant provisions.
Chapter 5: Trading, Transfer, and Registration & Settlement
Article 47: Following issuance, preferred shares may apply for listing and trading or transfer, without any lock-up period.
Publicly issued preferred shares may be listed and traded on a stock exchange. Privately issued preferred shares of listed companies may be transferred on a stock exchange, while privately issued preferred shares of unlisted public companies may be transferred on the National Equities Exchange and Quotations System, with transfer restricted to qualified investors. The specific procedures for trading or transferring such shares shall be separately formulated by the stock exchange or the National Equities Exchange and Quotations System.
Article 48: The investor suitability standards applicable to the trading or transfer of preferred shares shall be consistent with those in the issuance phase; for non‑publicly issued preferred shares with identical terms, the number of investors shall not exceed two hundred after such shares have been traded or transferred.
Article 49: China Securities Depository & Clearing Corporation shall provide services such as registration, custody, clearing, and settlement for preferred shares.
Chapter 6: Information Disclosure
Article 50: The company shall prepare the prospectus for the issuance of preferred shares or other information disclosure documents in accordance with the relevant information disclosure rules of the China Securities Regulatory Commission and fulfill its information disclosure obligations in compliance with the law. For listed companies, the procedures and requirements for information disclosure shall be governed by the Measures for the Administration of Securities Issuance by Listed Companies, the Detailed Rules for the Implementation of Non‑Public Issuance of Shares by Listed Companies, and the pertinent regulatory guidelines. For non‑listed public companies, the procedures and requirements for disclosing information related to the non‑public issuance of preferred shares shall be governed by the Measures for the Supervision and Administration of Non‑Listed Public Companies and the relevant regulatory guidelines.
Article 51: When a company issuing preferred shares discloses its periodic reports, it shall, in a dedicated section, disclose the status of issued preferred shares; the names and shareholdings of the top ten shareholders holding the largest number of the company’s preferred shares; the profit distribution to preferred shareholders; the repurchase of preferred shares; the restoration and exercise of voting rights by preferred shareholders; the accounting treatment of preferred shares; and other matters relating to preferred shares. The specific content and format shall be prescribed by the China Securities Regulatory Commission.
Article 52: A listed company issuing preferred shares shall, in the event of matters such as the restoration of voting rights or the repurchase of common shares, as well as other matters that may have a significant impact on the trading or transfer prices of its common or preferred shares, fulfill its information disclosure obligations, including the preparation and public announcement of interim reports, in accordance with Article 80 of the Securities Law and the relevant regulations of the China Securities Regulatory Commission.
Article 53: Non-listed public companies issuing preferred shares shall fulfill their routine information disclosure obligations in accordance with the Measures for the Supervision and Administration of Non-Listed Public Companies and relevant regulatory guidelines.
Chapter 7: Share Repurchases and Mergers & Acquisitions/Reorganizations
Article 54: A listed company may issue preferred shares in a non‑public offering as consideration for repurchasing its common shares from specific shareholders. The price at which the listed company repurchases its common shares shall be fair and reasonable and shall not prejudice the lawful rights and interests of shareholders or other stakeholders.
Article 55: Where a listed company repurchases its common shares for the purpose of reducing its registered capital and simultaneously issues preferred shares to the public, or where it repurchases its common shares from specific shareholders by means of a non‑public issuance of preferred shares, such transactions shall, in addition to complying with the conditions and procedures applicable to the issuance of preferred shares, also meet the following provisions:
(1) A listed company’s repurchase of ordinary shares shall be resolved by the board of directors in accordance with the law and submitted to the shareholders’ meeting for approval;
(2) A resolution adopted by the general meeting of a listed company regarding the repurchase of ordinary shares shall include the following matters: the price range for the repurchase, the number and proportion of ordinary shares to be repurchased, the duration of the repurchase, the validity period of the resolution, specific authorization granted to the board of directors to handle the repurchase of shares, and other relevant matters. Where preferred shares are used as consideration, the resolution shall also specify the total amount of preferred shares proposed for payment and the corresponding payment ratio; if preferred shares are to be publicly issued within one year from the date the repurchase plan is completed, the resolution shall further set forth the total funds allocated for the repurchase and their sources.
(3) Any resolution adopted by the general meeting of a listed company to repurchase ordinary shares shall be approved by at least two-thirds of the voting rights held by the ordinary shareholders present at the meeting (including preferred shareholders whose voting rights have been restored).
(4) A listed company shall announce the resolution to repurchase ordinary shares on the day following its adoption at the shareholders’ meeting.
(5) Notify creditors in accordance with the law.
Matters not addressed in these Measures shall comply with other relevant regulations of the China Securities Regulatory Commission concerning share repurchases by listed companies.
Article 56: A tender offer by a listed company shall apply to all shareholders of the target company; however, it may set different acquisition terms for preferred shareholders and common shareholders.
Article 57: A listed company may issue preferred shares to acquire assets in accordance with the conditions set forth in the Measures for the Administration of Major Asset Restructuring of Listed Companies; at the same time, it shall comply with Article 33 of these Measures and Articles 35 through 38, and disclose relevant information and fulfill the corresponding procedures in accordance with the law.
Article 58: When a listed company issues preferred shares as consideration for the acquisition of assets, it may concurrently raise accompanying funds.
Article 59: Where the issuance of preferred shares by a non-listed public company involves a major asset restructuring, it shall comply with the relevant regulations of the China Securities Regulatory Commission on major asset restructurings.
Chapter 8: Regulatory Measures and Legal Liabilities
Article 60: Where the Company, its controlling shareholders or actual controllers, the Company’s directors, supervisors, senior management personnel, and other persons directly liable, relevant market intermediaries and their responsible persons, as well as other market participants in the preferred stock pilot program, violate the provisions of these Measures, they shall be dealt with in accordance with the Company Law, the Securities Law, and the relevant regulations of the China Securities Regulatory Commission; if their conduct is suspected of constituting a crime, it shall be referred to the judicial authorities in accordance with the law for criminal prosecution.
Article 61: If a listed company or a non-listed public company violates the provisions of these Measures by, for example, failing to formulate relevant articles of association as required, or failing to convene a shareholders’ meeting in accordance with the agreed schedule to restore the voting rights of preferred shareholders, thereby harming the rights and interests of preferred shareholders and minority shareholders, the China Securities Regulatory Commission shall order it to make corrections. With respect to the listed company, the non-listed public company, and the persons directly in charge as well as other persons directly responsible, the Commission may impose appropriate administrative regulatory measures, as well as administrative penalties such as warnings or fines of no more than RMB 30,000.
Article 62: If a listed company violates the provisions of Paragraph 2 of Article 22 of these Measures, the China Securities Regulatory Commission may order it to make corrections and, for a period of thirty-six months, shall not accept any application by that company for the public issuance of securities.
Article 63: If a listed company or a non-listed public company issues preferred shares in a non‑public offering to investors other than those qualified under these Measures, the China Securities Regulatory Commission shall order it to make corrections and may, from the date of such conofficeation, refuse to accept the company’s application for issuing preferred shares for a period of thirty-six months.
Article 64: When underwriting non‑publicly issued preferred shares, if an underwriting institution allocates such shares to investors who do not meet the qualified investor requirements set forth in these Measures, the China Securities Regulatory Commission may order it to make corrections and, for a period of thirty-six months, prohibit it from participating in securities underwriting.
Chapter IX Supplementary Provisions
Article 65: For the purposes of these Measures, “qualified investors” include:
(1) Financial institutions established with the approval of the relevant financial regulatory authorities, including commercial banks, securities companies, fund management companies, trust companies, and insurance companies, among others;
(2) The wealth management products issued by the aforementioned financial institutions to investors include, but are not limited to, bank wealth management products, trust products, investment-linked insurance products, fund products, and asset management products offered by securities companies;
(3) For-profit legal entities with total paid-in capital or paid-in share capital of no less than RMB 5 million;
(4) Partnership enterprises with total paid-in capital of no less than RMB 5 million;
(5) Qualified Foreign Institutional Investors (QFII), Renminbi Qualified Foreign Institutional Investors (RQFII), and overseas strategic investors that meet the relevant regulations of the State Council’s competent authorities;
(6) Individual investors, other than the issuer’s directors, senior management, and their spouses, whose aggregate assets across all securities accounts, cash accounts, and asset management accounts held in their name are not less than RMB 5 million;
(7) Other qualified investors approved by the China Securities Regulatory Commission.
Article 66: Where a non-listed public company conducts an initial public offering of common shares and simultaneously issues preferred shares through a private placement, the issuance and information disclosure of such preferred shares shall comply with the relevant provisions of these Measures governing the private placement of preferred shares by listed companies.
Article 67: Overseas-listed companies registered in China that issue preferred shares overseas shall comply with the relevant regulations governing the issuance and listing of shares abroad.
Foreign‑listed companies registered in China that issue preferred shares within the country shall, by analogy, comply with the provisions of these Measures governing the issuance of preferred shares by non‑listed public companies, as well as with the Supervisory and Administrative Measures for Non‑Listed Public Companies and other relevant regulations. Such preferred shares may be transferred on the National Equities Exchange and Quotations for Small and Medium‑Sized Enterprises.
Article 68 The following terms used in these Measures shall have the meanings set forth below:
(1) Mandatory Dividends: The company must distribute dividends to preferred shareholders whenever there are distributable profits after tax.
(2) Distributable After-Tax Profits: The undistributed profits to which the issuer’s shareholders are entitled under law;
(3) Weighted Average Return on Equity: The weighted average return on equity calculated in accordance with “Rule No. 9 on the Preparation and Disclosure of Information by Companies Issuing Securities to the Public—Calculation and Disclosure of Return on Equity and Earnings Per Share.”
(4) SSE 50 Index: The SSE 50 Index published by China Securities Index Co., Ltd.
Article 69: For the purposes of this Measures, when calculating the number of qualified investors, if an asset management institution subscribes to or acquires preferred shares through two or more products under its management, such subscriptions or acquisitions shall be counted as those of a single investor.
Article 70 This Measures shall enter into force as of the date of its promulgation.

Administrative Measures for Information Disclosure of Non-Listed Public Companies
(Approved at the 5th Meeting of the Commission for the Administration of Securities in 2019 on December 18, 2019, and amended in accordance with the “Decision of the China Securities Regulatory Commission on Amending Certain Regulations on Securities and Futures” dated June 11, 2021.)
Chapter 1 General Provisions
Article 1: In order to standardize information disclosure practices of non-listed public companies, protect the legitimate rights and interests of investors, and safeguard market order and the public interest, these Measures are formulated in accordance with the provisions of the Company Law, the Securities Law, the State Council’s Decision on Certain Issues Concerning the National Equities Exchange and Quotations for Small and Medium-sized Enterprises, the Administrative Measures for the Supervision and Administration of Non-Listed Public Companies (CSRC Order No. 161), and other relevant laws and regulations.
Article 2 This Measures shall apply to the information disclosure activities related to periodic reports and ad hoc reports of non-listed public companies that are listed for public transfer on the National Equities Exchange and Quotations System for Small and Medium-sized Enterprises (hereinafter referred to as the National Equities Exchange and Quotations System), hereinafter referred to as “listed companies.”
Article 3: Information disclosed by listed companies shall be true, accurate, and complete; it shall be concise and clear, easily understood, and shall not contain any false records, misleading statements, or material omissions.
Information disclosed by listed companies that have issued shares and other securities in overseas markets and are listed there shall also be disclosed on the National Equities Exchange and Quotations System.
Article 4: In light of factors such as the listed company’s stage of development, its degree of public ownership, and its risk profile, and with full consideration of investor needs, a differentiated information disclosure regime shall be implemented for listed companies, based on the tiered structure of the National Equities Exchange and Quotations System—namely, the Select Tier, the Innovation Tier, and the Basic Tier.
Article 5: Directors, supervisors, and senior management personnel of listed companies shall perform their duties with loyalty and diligence, ensure that the company discloses information in a timely and fair manner, and guarantee that such disclosed information is true, accurate, and complete.
Article 6: Prior to the lawful disclosure of inside information, no person who is privy to such information shall publicly disclose or leak it, nor shall such person engage in trading based on that information.
Article 7: Information disclosed by a listed company in accordance with the law shall be published on information disclosure platforms that comply with the provisions of the Securities Law. The time at which a listed company publishes information on its corporate website or other public media shall not precede the time of publication on the aforementioned information disclosure platforms.
A listed company shall simultaneously make the disclosed information available at its registered office and on the National Equities Exchange and Quotations System for public inspection.
Information disclosure documents shall be prepared in Chinese. If an English version is also provided, the listed company shall ensure that the contents of both versions are consistent. In the event of any inconsistency between the two versions, the Chinese text shall prevail.
Article 8 The China Securities Regulatory Commission (hereinafter referred to as the CSRC), in accordance with the Securities Law and other relevant laws and regulations, as well as the provisions of these Measures, shall supervise and manage the conduct of all parties involved in the information disclosure of listed companies, and may, in conjunction with the market-tiering system, implement categorized supervision over such disclosures.
The National Equities Exchange and Quotations Co., Ltd. (hereinafter referred to as the NEEQ) exercises self-regulatory oversight over information disclosure activities of listed companies, strengthens regulatory inquiries, and urges listed companies to disclose information in a timely and accurate manner.
Article 9 Except for information that is required to be disclosed in accordance with laws, these Measures, or relevant self-regulatory rules, a listed company may voluntarily disclose information that is relevant to investors’ value judgments and investment decisions; however, such disclosure shall not conflict with information that is required to be disclosed pursuant to laws, these Measures, or relevant self-regulatory rules, nor shall it mislead investors.
Listed companies shall ensure the continuity and consistency of their information disclosure, avoid selective disclosure, and refrain from using voluntary disclosures to unduly influence the trading prices of the company’s shares and other securities. When voluntarily disclosing information that carries a predictive nature, companies must clearly set forth the basis for such predictions and disclose any potential uncertainties and risks.
Article 10: Where, due to special circumstances such as state secrets or commercial secrets, certain information required to be disclosed under these Measures is genuinely impracticable to disclose, the listed company may refrain from disclosure; however, it shall explain in the relevant periodic reports and ad hoc reports the reasons for not disclosing such information as prescribed. If the China Securities Regulatory Commission or the National Equities Exchange and Quotations Company deems disclosure necessary, the listed company shall disclose the information.
Chapter 2: Periodic Reports
Article 11: The periodic reports of listed companies include annual reports, interim reports, and quarterly reports. Companies listed on the Select Tier shall disclose annual reports, interim reports, and quarterly reports. Companies listed on the Innovation Tier and the Basic Tier shall disclose annual reports and interim reports.
Any information that has a material impact on investors’ investment decisions shall be disclosed in the periodic reports.
Article 12: The annual report shall be prepared and disclosed within four months from the end of each fiscal year; the interim report shall be prepared and disclosed within two months from the end of the first half of each fiscal year; and the quarterly reports shall be prepared and disclosed within one month from the end of the third and ninth months of each fiscal year.
The disclosure date of the first-quarter report shall not be earlier than the disclosure date of the previous year’s annual report.
Article 13: The financial accounting reports included in the annual report shall be audited by an accounting office that complies with the provisions of the Securities Law.
The certified public accountants who sign off on audit engagements for companies listed on the Select Tier shall be rotated on a regular basis, with the specific arrangements to be prescribed by the National Equities Exchange and Quotations Company.
Article 14 The annual report of a listed company shall include the following contents:
(1) Basic Information about the Company;
(II) Key Accounting Data and Financial Indicators;
(3) Management’s Discussion and Analysis;
(4) The issuance and changes in the company’s shares and bonds, including the total outstanding amounts of shares and bonds as of the end of the reporting period, the total number of shareholders, and the shareholding details of the company’s top ten shareholders.
(5) Information on the controlling shareholder and the actual controller;
(6) Details regarding the appointment and shareholding of directors, supervisors, senior management personnel, and core employees;
(7) Material events that occurred during the reporting period and their impact on the company;
(8) Use of proceeds from the company’s fundraising, if any;
(9) Profit distribution;
(10) Corporate governance and internal control;
(11) The full text of the financial accounting report and the audit report;
(12) Other matters prescribed by the China Securities Regulatory Commission.
Article 15 The interim report of a listed company shall set forth the following contents:
(1) Basic Information about the Company;
(II) Key Accounting Data and Financial Indicators;
(3) The issuance and changes in the company’s shares and bonds; the total number of shareholders at the end of the reporting period; and the shareholding details of the company’s top ten shareholders.
(4) Any changes in the controlling shareholder or the actual controller;
(5) Material litigation, arbitration, and other significant events during the reporting period, together with their impact on the company;
(6) Use of proceeds from the company’s fundraising, if any;
(7) Financial accounting reports;
(8) Other matters prescribed by the China Securities Regulatory Commission.
Article 16: The quarterly report of a listed company shall include the following information:
(1) Basic Information about the Company;
(II) Key Accounting Data and Financial Indicators;
(3) Other matters as prescribed by the China Securities Regulatory Commission.
Article 17. In addition to the matters specified in Article 14 of these Measures, companies listed on the Select Tier shall, in their annual reports, fully disclose industry-specific operational information and risk factors that could have a material adverse impact on the company’s core competitiveness, business operations, and future development, taking into account the characteristics of their respective industries.
For companies listed on the Select Tier that have not yet achieved profitability, they shall fully disclose in their annual reports the reasons for their continued unprofitability and the impact thereof on the company’s production and operations.
Article 18: If a listed company has shares with special voting rights, it shall disclose in its annual report the holdings and changes in such shares, as well as the implementation of measures to protect the legitimate rights and interests of the relevant investors.
Article 19: Where a listed company’s shareholders’ meeting adopts the cumulative voting system and online voting, it shall disclose in its annual report the implementation status of such systems and arrangements.
Article 20: Directors and senior management of listed companies shall sign written conofficeation opinions on the periodic reports.
The Supervisory Board shall review the periodic reports prepared by the Board of Directors and issue a written audit opinion, stating whether the Board’s preparation and review procedures comply with applicable laws, administrative regulations, and the provisions of the China Securities Regulatory Commission and the National Equities Exchange and Quotations Company, and whether the contents of the reports accurately, precisely, and comprehensively reflect the actual circumstances of the listed company. The supervisors shall sign a written conofficeation of their opinion.
If directors, supervisors, or senior management of a listed company are unable to guarantee the truthfulness, accuracy, or completeness of the contents of a periodic report, or if they have objections thereto, they shall state their views and provide reasons in a written conofficeation, which the listed company shall disclose. If the listed company fails to disclose such information, the directors, supervisors, and senior management may directly apply for its disclosure.
Article 21: Prior to the disclosure of periodic reports, if there is a leakage of financial results, or if there are any occurrences of performance…
In the event of rumors or abnormal trading volatility in the company’s shares and other securities, the listed company shall promptly disclose the relevant financial data for the current reporting period.
Article 22: If a company listed on the Select Tier anticipates that it will be unable to disclose its annual report within two months from the end of the accounting year, it shall, within two months from the end of such accounting year, disclose the principal financial data for the reporting period.
Companies listed on the Select Tier that anticipate losses, a turnaround to profitability, or significant changes in their operating performance shall promptly issue a performance forecast.
Article 23: If the financial accounting report included in a periodic report receives a non-standard audit opinion, the board of directors of the listed company shall provide a special explanation addressing the matters covered by such audit opinion.
Article 24: If a listed company fails to disclose its periodic reports within the prescribed time limit, the National Equities Exchange and Quotations Company shall impose disciplinary measures in accordance with its self-regulatory rules; in cases of serious violations, it shall refer the matter to the China Securities Regulatory Commission for investigation and case filing.
If a company listed on the Select Tier fails to disclose its annual report and interim report within the prescribed time limit, the China Securities Regulatory Commission shall initiate an investigation.
Chapter 3: Interim Reports
Article 25: When a material event occurs that may have a significant impact on the trading prices of the listed company’s shares and other securities, or that may substantially affect investors’ investment decisions, and such information has not yet been disclosed to investors, the listed company shall promptly submit a temporary report on the matter to the China Securities Regulatory Commission and the National Equities Exchange and Quotations Company, and make a public announcement specifying the cause of the event, its current status, and the potential impacts.
The “material events” referred to in the preceding paragraph include:
(1) Material changes to the company’s business policies and scope of operations;
(2) Major investment activities of the company, including the purchase or sale of significant assets within one year that exceed 30 percent of the company’s total assets, or the mortgage, pledge, sale, or write‑off of principal operating assets in a single transaction that exceeds 30 percent of the value of such assets;
(3) The Company enters into material contracts, provides significant guarantees, or engages in related-party transactions, which may have a material impact on the Company’s assets, liabilities, equity, and operating results;
(4) The occurrence of material debts by the company, or any default arising from its failure to repay material debts when due;
(5) The company incurs substantial losses or significant damages;
(6) Material changes in the external conditions affecting the company’s production and operations;
(7) Changes occur in the company’s directors, more than one-third of its supervisors, or its manager, and the chairman of the board or the manager is unable to perform their duties;
(8) Where a shareholder holding more than five percent of the company’s shares or the actual controller experiences a significant change in its shareholding or control over the company, or where the company’s actual controller and other enterprises under its control engage in businesses that are identical to or similar to those of the company and such engagement undergoes a significant change;
(9) The company’s plans for dividend distribution and capital increases; any material changes to the company’s shareholding structure; decisions regarding capital reduction, merger, spin-off, dissolution, or application for bankruptcy; or, where the company has entered bankruptcy proceedings in accordance with the law or has been ordered to close.
(10) Any material litigation or arbitration involving the company, or any resolution of the shareholders’ meeting or the board of directors that has been revoked or declared invalid by law;
(11) The Company is under investigation by competent authorities for suspected violations of laws or regulations, or has been subject to criminal penalties or significant administrative penalties; the Company’s controlling shareholder, actual controller, directors, supervisors, or senior management personnel are under investigation by competent authorities, subjected to detention measures or other compulsory measures, or have been subject to criminal penalties or significant administrative penalties.
(12) Receipt of substantial government subsidies or other extraordinary gains that may have a material impact on the company’s assets, liabilities, equity, or operating results;
(13) The Company’s Board of Directors has adopted resolutions regarding the proposed listing on other securities exchanges, the equity incentive plan, and the share repurchase plan;
(14) The company’s principal assets have been seized, impounded, or frozen;
(15) The company loses significant production qualifications, licenses, or franchise rights, or its principal business operations are brought to a standstill;
(16) The court has issued an order prohibiting the controlling shareholder from transferring its shares; or any shareholder’s holdings of five percent or more of the company’s shares have been pledged, frozen, subject to judicial auction, placed in trust, encumbered by a trust, or otherwise legally restricted in voting rights.
(17) Changes to accounting policies and accounting estimates (except as required by laws, administrative regulations, or the national unified accounting system);
(18) Where previously disclosed information contains errors, has not been disclosed in accordance with applicable regulations, or is falsely recorded, and the relevant authorities have ordered corrective action, or the board of directors has resolved to make corrections;
(19) Other matters prescribed by the China Securities Regulatory Commission.
Where the controlling shareholder or the actual controller of a listed company has a significant impact on the occurrence or development of a material event, they shall promptly notify the listed company in writing of any relevant information of which they are aware and cooperate with the listed company in fulfilling its information disclosure obligations.
Article 26 A listed company shall, upon the occurrence of any of the following events—whichever occurs first—promptly fulfill its obligation to disclose material information:
(1) When the board of directors or the supervisory board adopts a resolution regarding such material event;
(2) When the relevant parties sign a letter of intent or an agreement regarding the material event;
(3) When a director, supervisor, or senior management personnel becomes aware of, or ought to have become aware of, the occurrence of such material event.
If a listed company’s planned material matter involves significant uncertainty and immediate disclosure could harm the company’s interests or mislead investors, and if the insiders with access to such inside information have provided a written commitment to maintain confidentiality, the company may refrain from disclosing the matter for the time being; however, it must disclose it no later than when a final resolution is adopted, a definitive agreement is signed, or the transaction is conofficeed as likely to be consummated.
Where relevant information is indeed difficult to keep confidential, has already been leaked, or has given rise to market rumors resulting in significant price fluctuations in the company’s shares and other securities, the company shall promptly disclose the related planning and progress.
Article 27: After a listed company discloses a material event, if any subsequent developments or changes concerning that disclosed event are likely to have a significant impact on investors’ decision-making or on the trading prices of the company’s shares and other securities, the company shall promptly disclose such developments or changes, together with an assessment of their potential implications.
Article 28: If a controlling subsidiary of a listed company experiences a material event as specified in Article 25 of these Measures, which may have a significant impact on investors’ decision-making or on the trading prices of the company’s shares and other securities, the listed company shall fulfill its information disclosure obligations.
When a company in which a listed company holds an equity interest experiences an event that may have a significant impact on investors’ decision-making or on the trading prices of the listed company’s shares and other securities, the listed company shall fulfill its information disclosure obligations.
Article 29: If the trading of a listed company’s shares or other securities is deemed by the China Securities Regulatory Commission or the National Equities Exchange and Quotations Company to be experiencing abnormal fluctuations, the listed company shall promptly ascertain the factors contributing to such abnormal volatility and disclose them prior to the opening of the next trading day.
Article 30: Where information disseminated by the media may or has already had a significant impact on investors’ decision-making or on the trading prices of the listed company’s shares and other securities, the listed company shall promptly ascertain the facts and issue an appropriate clarification announcement.
Chapter 4: Management of Information Disclosure Affairs
Article 31 A listed company shall establish a system for managing information disclosure, which shall be reviewed and approved by the board of directors and disclosed. The information disclosure management system shall include:
(1) Clarify the information that listed companies are required to disclose and establish disclosure standards;
(2) The procedures for the transmission, review, and disclosure of non-public information;
(3) The duties of the person responsible for information disclosure in the process of information disclosure;
(4) The duties of directors and the board of directors, supervisors and the supervisory board, and senior management personnel with respect to reporting, deliberation, and disclosure;
(5) Records and safeguarding system for the performance of duties by directors, supervisors, and senior management personnel;
(6) Confidentiality measures for non-public information, the scope of persons with access to inside information, and their confidentiality obligations;
(7) Internal control and oversight mechanisms for financial management and accounting;
(8) The procedures for applying for, reviewing, and releasing information to the public; as well as the mechanisms and policies for information communication with investors, securities service institutions, the media, and other stakeholders.
(9) Archival management of documents and materials related to information disclosure;
(10) The information disclosure management and reporting system pertaining to subsidiaries;
(11) The accountability mechanism for failure to disclose information as required, and the disciplinary measures applicable to those who violate such requirements.
The person responsible for information disclosure refers to the board secretary of the listed company or any individual designated by the listed company to oversee information disclosure matters.
Companies listed on the Select Tier and the Innovation Tier shall appoint a board secretary. Companies listed on the Basic Tier may appoint a board secretary; if they do not, they must designate a senior executive to concurrently serve as the person responsible for information disclosure. The board secretary is a senior executive of the company, and their appointment and performance of duties shall comply with the relevant regulations of the China Securities Regulatory Commission and the National Equities Exchange and Quotations Company.
Companies listed on the Select Tier shall establish an information disclosure management department to assist the board secretary in managing information disclosure matters.
Article 32: The chairman, the manager, and the person responsible for information disclosure of a listed company shall bear primary responsibility for the truthfulness, accuracy, and completeness of the information disclosed in the company’s interim reports.
The chairman, the manager, and the chief financial officer of a listed company shall bear primary responsibility for the truthfulness, accuracy, and completeness of the company’s financial reports.
Article 33: Directors, supervisors, and senior management personnel of a listed company shall closely monitor the preparation of information disclosure documents, ensure that periodic reports and ad hoc reports are disclosed within the prescribed time limits, and cooperate with the listed company in fulfilling its information disclosure obligations.
Article 34: A listed company shall establish procedures for the preparation, review, and public disclosure of its periodic reports. The general manager, the chief financial officer, the person responsible for information disclosure, and other relevant personnel shall promptly prepare draft periodic reports and submit them to the board of directors for review; the person responsible for information disclosure shall ensure that the drafts are delivered to the directors for their consideration; the chairman shall convene and preside over board meetings to deliberate on the periodic reports; the supervisory board shall review the periodic reports prepared by the board of directors; and the person responsible for information disclosure shall organize the public announcement of the periodic reports.
Article 35: A listed company shall establish procedures for the reporting, transmission, review, and disclosure of material events. When directors, supervisors, or senior management personnel become aware of the occurrence of a material event, they shall, in accordance with the company’s regulations, promptly fulfill their reporting obligations; upon receipt of such a report, the chairman shall immediately report to the board of directors and urge the person responsible for information disclosure to organize the timely disclosure of the relevant information.
Article 36: A listed company shall not disclose inside information when communicating with any institution or individual regarding its operating performance, financial condition, or other matters through methods such as earnings conferences, analyst meetings, roadshows, or investor research visits.
Article 37 Directors shall be informed of and continuously monitor the company’s production and operations, financial condition, and any material events that have occurred or may occur, as well as their implications, and shall proactively conduct investigations and obtain the information necessary for decision-making.
Article 38: Supervisors shall oversee the performance of information disclosure duties by the company’s directors and senior management; they shall monitor the company’s information disclosure practices and, upon identifying any violations of laws or regulations in such disclosures, shall conduct investigations and submit recommendations for appropriate remedial measures.
Article 39: Senior management shall promptly report to the Board of Directors any material events concerning the Company’s operations or finances, as well as developments or changes in previously disclosed matters and other relevant information.
Article 40 The person responsible for information disclosure shall organize and coordinate the information disclosure activities of the listed company, compile the information that the listed company is required to disclose and report it to the board of directors, continuously monitor media coverage of the company and proactively verify the accuracy of such reports, and handle matters related to the external release of the company’s information.
The person responsible for information disclosure is entitled to attend shareholders’ meetings, board of directors meetings, supervisory board meetings, and relevant meetings of senior management; to obtain information on the company’s financial and operational status; and to review all documents pertaining to information disclosure matters. A listed company shall provide convenient conditions to enable the information disclosure officer to perform their duties, and the chief financial officer shall cooperate with the information disclosure officer in matters related to financial information disclosure.
Article 41: Shareholders and actual controllers of a listed company shall not abuse their shareholder rights or dominant position to instruct the listed company to fail to fulfill its information disclosure obligations in accordance with the law, nor shall they disclose information containing false records, misleading statements, or material omissions. They shall also not require the listed company to provide them with inside information.
When a listed company’s shareholders or actual controllers experience any of the following events, they shall promptly notify the company and cooperate with the listed company in fulfilling its information disclosure obligations.
(1) A shareholder holding more than five percent of the company’s shares, or the actual controller, experiences a significant change in its shareholding or control over the company; alternatively, the company’s actual controller and other enterprises under its control engage in business activities that are identical to or substantially similar to those of the company, resulting in a significant change.
(2) The court has issued an order prohibiting the controlling shareholder from transferring its shares, and any shareholder holds more than five percent of the company’s shares that are pledged, frozen, subject to judicial auction, entrusted to a custodian, encumbered by a trust, or otherwise legally restricted in voting rights;
(3) Intending to undertake a major asset or business restructuring of the listed company;
(4) Other circumstances prescribed by the China Securities Regulatory Commission.
Shareholders or ultimate controllers who hold more than five percent of the shares of a listed company through entrustment, trust, or other means shall promptly disclose the identity of the principal to the listed company and cooperate with the listed company in fulfilling its information disclosure obligations.
Prior to the lawful disclosure of information that is required to be disclosed, if such information has already been disseminated in the media or if the company’s shares or other securities have exhibited abnormal trading activity, the shareholder or actual controller shall promptly and accurately submit a written report to the listed company and cooperate with the listed company in ensuring timely and accurate disclosure.
Article 42: Directors, supervisors, senior management personnel, shareholders holding more than five percent of the shares, their concerted actors, and the actual controllers of a listed company shall promptly submit to the board of directors a list of related parties, along with explanations of their relationships and any changes thereto. The listed company shall comply with the deliberation procedures for related-party transactions and strictly enforce the voting‑avoidance rules applicable to such transactions. No party to a transaction may evade the listed company’s obligations to disclose information or circumvent the deliberation procedures for related-party transactions by concealing related-party relationships or employing other means.
Article 43: The sponsoring securities office providing ongoing supervision services to a listed company shall continuously monitor significant developments in the company’s business operations, corporate governance, and financial condition, and shall guide and urge the company to fulfill its information disclosure obligations in a standardized manner. The listed company shall cooperate with the sponsoring securities office’s ongoing supervision efforts, provide the necessary materials, and facilitate the office’s performance of such supervisory duties.
During the period of ongoing supervision, if the sponsoring securities office identifies errors, omissions, or misleading statements in information that a listed company intends to disclose or has already disclosed, or if it discovers matters that should have been disclosed but were not, the sponsoring securities office shall require the listed company to make corrections or provide supplementary disclosures. If the listed company refuses to make such corrections or supplements, the sponsoring securities office shall promptly issue a risk‑disclosure announcement and report the matter to the National Equities Exchange and Quotations Company; in cases of serious violations, it shall also report to the local branch of the China Securities Regulatory Commission where the listed company is registered.
The specific regulations governing the ongoing supervision services of sponsoring securities offices shall be formulated by the National Equities Exchange and Quotations Company.
Article 44 Securities service institutions that issue special documents to assist listed companies in fulfilling their information disclosure obligations shall exercise due diligence and act with honesty and integrity, conscientiously perform their duty of prudent verification, and render opinions in accordance with the business rules, industry practice standards, regulatory requirements, and ethical codes duly established by law, thereby ensuring the truthfulness, accuracy, and completeness of the documents they issue.
A listed company shall cooperate with the securities service institutions providing services to it, furnish materials relevant to their professional work as required, and shall not request such institutions to issue documents that are inconsistent with objective facts or impede their work.
When issuing special-purpose documents for information disclosure, if a securities service institution identifies false records, misleading statements, or material omissions in the materials provided by a listed company, it shall require the company to supplement and correct such deficiencies. If the listed company refuses to do so, the securities service institution shall report the matter to the National Equities Exchange and Quotations Company; in cases of serious violations, it shall also notify the local branch of the China Securities Regulatory Commission where the listed company is registered.
Article 45: When a listed company dismisses an accounting office, it shall promptly notify the accounting office following the board of directors’ resolution. At the shareholders’ meeting where the dismissal of the accounting office is put to a vote, the accounting office shall be permitted to state its views. If the shareholders’ meeting adopts a resolution to dismiss or replace the accounting office, the listed company shall, upon disclosure, specify the particular reasons for the change and set forth the accounting office’s statements.
Article 46: No institution or individual shall illegally obtain, disclose, or disseminate inside information of a listed company; shall not use such inside information to trade, or to advise others to trade, the company’s shares or other securities; and shall not incorporate inside information into investment valuation reports, research reports, or other documents.
Article 47: The media shall report objectively and truthfully on matters involving listed companies, thereby exercising its role in public oversight.
No institution or individual may provide or disseminate false or misleading information about listed companies to investors.
Anyone who violates the provisions of the preceding two paragraphs and causes losses to investors shall bear liability for damages in accordance with the law.
Chapter 5: Supervision and Administration
Article 48 The China Securities Regulatory Commission shall, in accordance with the law, conduct inspections of listed companies, sponsoring securities offices, and securities service institutions, and such entities shall cooperate.
The China Securities Regulatory Commission may require listed companies, their shareholders, actual controllers, or their directors, supervisors, and senior management to provide explanations, clarifications, or relevant materials regarding matters related to information disclosure, or may request that the listed company obtain professional opinions from its sponsoring securities office or other securities service institutions.
The China Securities Regulatory Commission may require sponsoring securities offices and securities service institutions to conduct investigations into information disclosure matters concerning listed companies and to issue special opinions. If the CSRC has doubts regarding the authenticity, accuracy, or completeness of documents issued by sponsoring securities offices and securities service institutions, it may request those institutions to provide explanations and supplementary materials, and may also review their working papers.
Article 49: If a listed company, its directors, supervisors, and senior management personnel, or its shareholders and actual controllers, together with their respective directors, supervisors, and senior management personnel, violate these Measures, the China Securities Regulatory Commission may impose the following measures:
(1) Order to make corrections;
(2) Regulatory interviews;
(3) Order a public explanation;
(4) Issuing a warning letter;
(5) Being designated as an unsuitable candidate;
(6) Other regulatory measures that may be taken in accordance with the law.
Article 50: Where a sponsoring securities office and its personnel, in performing their obligations such as ongoing supervision, fail to exercise due diligence and fulfill their duties with serious negligence, the China Securities Regulatory Commission may impose measures including ordering rectification, conducting regulatory talks, issuing warning letters, and taking other regulatory measures permitted by law.
Article 51 Where a securities service institution and its personnel, in issuing special documents for a listed company to fulfill its information disclosure obligations, violate the Securities Law, administrative regulations, or the provisions of the China Securities Regulatory Commission, the CSRC may impose measures such as ordering rectification, conducting regulatory talks, issuing warning letters, and taking other regulatory measures permitted by law.
Article 52 The National Equities Exchange and Quotations Company may, in accordance with its self-regulatory rules and the provisions of the listing agreement, conduct verification and inspections of listed companies, sponsoring securities offices, and securities service institutions; require listed companies and their directors, supervisors, senior management personnel, shareholders, and actual controllers, as well as sponsoring securities offices and securities service institutions, to provide explanations on matters related to information disclosure; and, upon identifying any issues, handle them in accordance with relevant regulations, promptly referring any suspected violations to the China Securities Regulatory Commission.
Article 53: If a listed company, the sponsoring securities office, securities service institutions, or their personnel violate the self-regulatory rules pertaining to information disclosure, the National Equities Exchange and Quotations Company may impose the following self-regulatory measures on the relevant parties concerned:
(1) Scheduling a meeting for discussion;
(2) Require the submission of a written undertaking;
(3) Issue a warning letter;
(4) Order to make corrections;
(5) Other regulatory measures prescribed by the National Equities Exchange and Quotations Company.
In cases of serious violations, the National Equities Exchange and Quotations Company may impose disciplinary measures, such as issuing public reprimands or publicly condemning the parties concerned.
Chapter Six: Legal Liability
Article 54: If a listed company fails to fulfill its information disclosure obligations as required, or if the information it discloses contains false records, misleading statements, or material omissions, the China Securities Regulatory Commission shall impose penalties in accordance with the relevant provisions of the Securities Law.
If the controlling shareholder or the actual controller of a listed company directs others to engage in the conduct specified in the preceding paragraph, or if they are aware of such conduct yet fail to promptly stop or rectify it, the China Securities Regulatory Commission may impose penalties in accordance with the provisions of the preceding paragraph.
Article 55: If a listed company, together with its directors, supervisors, senior management personnel, shareholders and their concerted actors, or the actual controller, as well as the sponsoring securities office and securities service institutions, fails to fulfill their reporting obligations in accordance with the provisions of these Measures, or if the reports submitted contain false records, misleading statements, or material omissions, the China Securities Regulatory Commission shall impose penalties in accordance with the relevant provisions of the Securities Law.
Article 56: If a listed company evades its obligations to disclose information or file reports by concealing related-party relationships or by other means, the China Securities Regulatory Commission shall impose penalties in accordance with the relevant provisions of the Securities Law.
Article 57 Where a securities service institution and its personnel, in issuing special documents to assist a listed company in fulfilling its information disclosure obligations, violate the Securities Law, administrative regulations, or the provisions of the China Securities Regulatory Commission and are subject to administrative penalties, the China Securities Regulatory Commission shall impose such penalties in accordance with the relevant provisions of the Securities Law.
Article 58: Any institution or individual that discloses inside information of a listed company, or uses such inside information to trade stocks or other securities, shall be subject to penalties by the China Securities Regulatory Commission in accordance with the relevant provisions of the Securities Law.
Article 59: Any institution or individual that prepares or disseminates false information to disrupt the securities market, or any media outlet that publishes inaccurate or biased information about listed companies, shall be subject to penalties by the China Securities Regulatory Commission in accordance with the relevant provisions of the Securities Law.
Anyone who makes false statements or provides misleading information in the trading of stocks and other securities shall be subject to penalties by the China Securities Regulatory Commission in accordance with the relevant provisions of the Securities Law.
Article 60: If a listed company fails to formulate an information disclosure management system in accordance with the provisions of these Measures, the China Securities Regulatory Commission may impose regulatory measures requiring it to make corrections. If the company refuses to make such corrections, it may be issued a warning or fined up to RMB 30,000.
Article 61: If a shareholder or the actual controller of a listed company fails to cooperate, in accordance with the law, with the listed company’s obligation to disclose information, or unlawfully requests the listed company to provide inside information, the China Securities Regulatory Commission may impose regulatory measures requiring corrective action. In cases of refusal to comply, a warning may be issued, or a fine of no more than RMB 30,000 may be imposed.
Article 62: Where a relevant liable entity violates these Measures and circumstances exist, such as proactively eliminating or mitigating the harmful consequences, penalties shall be imposed leniently or reduced in accordance with the law.
Where an unlawful act is minor and promptly rectified, and no harmful consequences have resulted, no penalty shall be imposed.
Article 63: Where a relevant liable entity violates the provisions of these Measures and the circumstances are serious, the China Securities Regulatory Commission may impose a ban from the securities market.
Article 64: Any violation of these Measures that is suspected of constituting a crime shall be referred to the judicial authorities in accordance with the law, and criminal liability shall be pursued.
Chapter VII Supplementary Provisions
Article 15. The following terms used in these Measures shall have the meanings set forth below:
(1) The sponsoring securities office refers to a securities company that, in accordance with the Provisional Measures for the Administration of the National Equities Exchange and Quotations Co., Ltd., engages in relevant business activities on the National Equities Exchange and Quotations System.
(2) Securities service institutions refer to accounting offices, asset appraisal agencies, law offices, financial advisory institutions, credit rating agencies, and other entities that prepare special reports or documents to assist listed companies in fulfilling their information disclosure obligations.
(3) “Timely” means within two trading days from the date of commencement of the calculation period or from the time the disclosure event occurs.
(4) Related-party transactions of a listed company refer to any transactions involving the transfer of resources or obligations between the listed company, or its controlled subsidiaries, and its related parties.
Related parties include related legal entities and related natural persons.

A legal person or non-legal person organization that falls under any of the following circumstances shall be deemed an affiliated legal person of the listed company:
1. A legal or non-legal entity that directly or indirectly controls the listed company;
2. Any legal or non-legal entity that is directly or indirectly controlled by the legal entity referred to in the preceding paragraph, excluding the listed company and its wholly‑owned subsidiaries;
3. Any legal or non-legal entity that is directly or indirectly controlled by, or whose directors or senior management are held by, the relevant natural person, excluding the listed company and its controlled subsidiaries;
4. Any legal or non-legal entity that directly or indirectly holds more than five percent of the shares of the listed company;
5. Within the past twelve months, or within the next twelve months pursuant to any relevant agreement or arrangement, any of the aforementioned circumstances exists;
6. Other legal or non-legal entities that, in accordance with the principle of substance over form, are determined by the China Securities Regulatory Commission, the National Equities Exchange and Quotations Company, or the listed company to have a special relationship with the listed company and may, or already have, resulted in a bias in favor of such entities in the listed company’s interests.
A natural person who falls under any of the following circumstances shall be deemed an associated natural person of the listed company:
1. Natural persons who directly or indirectly hold more than five percent of the shares of a listed company;
2. Directors, supervisors, and senior management personnel of listed companies;
3. Directors, supervisors, and senior management personnel of the listed company who directly or indirectly exercise control over it;
4. The close family members of the persons referred to in Items 1 and 2 above include spouses, parents, children who have reached the age of eighteen and their spouses, siblings and their spouses, the spouses’ parents and siblings, as well as the parents of one’s children’s spouses.
5. Within the past twelve months, or within the next twelve months pursuant to any relevant agreement or arrangement, any of the aforementioned circumstances exists;
6. Other natural persons who, in accordance with the principle that substance prevails over form, are determined by the China Securities Regulatory Commission, the National Equities Exchange and Quotations Company, or the listed company to have a special relationship with the listed company and may or have already caused the listed company to favor their interests.
Article 66: With respect to information disclosure by non-listed public companies whose shares are not publicly traded on the National Equities Exchange and Quotations System, such disclosures shall be governed by the relevant provisions of the Measures for the Supervision and Administration of Non-Listed Public Companies.
Article 67 Where the China Securities Regulatory Commission has special provisions regarding information disclosure by companies in specific industries, such provisions shall apply.
Article 68 This Measures shall enter into force on the date of its promulgation.

Measures for the Administration of Client Transaction Settlement Funds
(Issued on May 16, 2001, by Order No. 3 of the China Securities Regulatory Commission, as amended pursuant to the “Decision of the China Securities Regulatory Commission on Amending Certain Securities and Futures Regulations” dated June 11, 2021.)
Chapter 1 General Provisions
Article 1: In order to standardize the management of securities trading settlement funds and protect the interests of investors, these Measures are formulated in accordance with the Securities Law of the People’s Republic of China (hereinafter referred to as the “Securities Law”).
Article 2: Client trading settlement funds must be deposited in full into designated commercial banks engaged in the custody of securities trading settlement funds, and shall be managed in separate accounts. The misappropriation of client trading settlement funds is strictly prohibited.
Article 3 Commercial banks and securities registration and clearing companies (hereinafter referred to as “clearing companies”) engaged in the custody of funds for securities trading settlement shall, in accordance with these Measures, exercise oversight over the designated transfers of clients’ trading settlement funds and clearing reserve funds.
Article 4 The China Securities Regulatory Commission (hereinafter referred to as the CSRC) shall, in accordance with…
This Measures shall exercise supervisory and administrative oversight over the custody and settlement of securities trading funds by securities companies, clearing companies, and commercial banks.
Chapter 2: Account Management
Article 5: Securities companies and their securities branches shall deposit all client transaction settlement funds in designated special deposit accounts for client transaction settlement funds and clearing reserve accounts.
The clearing company must deposit the full amount of the clearing reserve funds entrusted by securities offices into a dedicated clearing reserve deposit account.
Article 6: Securities companies may, as required by their business operations, deposit clients’ trading settlement funds with multiple custodian banks; however, they must designate one of these banks as the primary custodian bank.
Article 7: Securities companies shall open a dedicated deposit account for client transaction settlement funds with the custodian bank, and a dedicated deposit account for their own funds with the lead custodian bank.
Securities branches under a securities company shall open a dedicated deposit account for client transaction settlement funds at the local branch of the custodian bank designated by the securities company.
The clearing company shall open, with the settlement bank, a dedicated deposit account for settlement reserve funds, a dedicated deposit account for its own funds, and a dedicated account for capital verification.
Article 8: A securities company may open only one dedicated deposit account for client transaction settlement funds at each custodian bank, and only one dedicated deposit account for its own funds at the lead custodian bank.
A securities branch may open only one dedicated deposit account for client transaction settlement funds at a local branch of the same custodian bank.
A clearing company may open only one dedicated deposit account for settlement reserve funds, one dedicated deposit account for its own funds, and one dedicated account for capital verification with the same clearing bank.
Article 9: The special deposit accounts for client transaction settlement funds opened by securities companies and their branches, the special deposit accounts for proprietary funds opened by securities companies, and the special deposit accounts for clearing reserve funds, proprietary funds, and capital verification opened by clearing institutions shall be reported to the China Securities Regulatory Commission within three business days of their establishment. Such accounts may not be used until the account filing receipt has been obtained.
Article 10: Upon obtaining the account filing acknowledgment from the China Securities Regulatory Commission, a securities company shall notify its custodian bank and the clearing corporation.
Upon receipt of the account filing acknowledgment from the China Securities Regulatory Commission, the clearing company shall notify the settlement bank and the securities office.
Article 11: A securities company shall, upon filing with the China Securities Regulatory Commission, close any dedicated deposit account for client transaction settlement funds that is no longer in use, and simultaneously notify the relevant custodian bank and clearing corporation.
The clearing company shall, upon filing with the China Securities Regulatory Commission, close any dedicated deposit accounts for settlement reserve funds and capital verification that are no longer in use, and simultaneously notify the relevant securities offices and custodian banks.
Specialized deposit accounts for proprietary funds that are no longer used by securities offices or clearing companies shall be closed upon filing with the China Securities Regulatory Commission. In particular, when a securities office closes its specialized deposit account for proprietary funds, it shall notify the clearing company; and when a clearing company closes such an account, it shall notify the settlement bank.
Article 12: When a securities company or a securities branch undergoes relocation, ceases operations, or encounters other such circumstances, it shall promptly close any dedicated deposit accounts for client transaction settlement funds and for its own funds that are no longer in use.
Article 13: Where the special deposit accounts for client transaction settlement funds, clearing reserve funds, or proprietary funds are amended, such changes shall be deemed equivalent to the closure of the old account and the opening of a new account.
Chapter 3: Fund Allocation and Oversight
Article 14: Comprehensive securities companies shall maintain separate accounts for client transaction settlement funds and their proprietary securities trading funds, and shall keep their business personnel and financial accounts segregated; mixed operations are prohibited.
Article 15: The custodian bank and the clearing company may transfer funds into the securities company’s designated account only after verifying that the account for which the securities company has requested a fund transfer has been filed with the China Securities Regulatory Commission and that the use of the dedicated deposit account for proprietary funds complies with the requirements set forth in these Measures.
The settlement bank may transfer funds to the account only after verifying that the account for which the clearing company has requested a fund transfer has been filed with the China Securities Regulatory Commission and that the use of the dedicated deposit account for proprietary funds complies with the provisions of this Law.
Article 16: Client transaction settlement funds may be transferred only between the client’s dedicated transaction settlement deposit account and the clearing reserve account, except for transactions such as client withdrawals and the transfer of fees collected by securities companies from clients into their own dedicated capital deposit accounts.
Article 17: Comprehensive securities companies shall, when collecting commissions and other fees from clients and replenishing their clearing reserve funds with proprietary funds, effect such transfers exclusively through the clearing reserve fund account and the dedicated deposit account for proprietary funds.
Securities offices engaged in brokerage activities shall, when collecting commissions and other fees from clients, remit such funds centrally from a designated dedicated deposit account for client transaction settlement funds to the securities office’s own capital account.
When the clearing corporation collects handling fees and other charges from securities offices, such payments shall be transferred from the dedicated settlement reserve account to the clearing corporation’s dedicated account for its own funds.
Article 18: When issuing securities through a stock exchange, subscription funds held in the capital verification account must be transferred via the clearing reserve account.
Funds raised by a securities company from clients in connection with the underwriting of unlisted securities shall be remitted to the issuer via the securities company’s dedicated client transaction settlement funds deposit account held at the custodian bank.
Article 19: Securities companies shall file their proprietary securities accounts with the China Securities Regulatory Commission and the clearing company. The clearing company shall, based on the proprietary securities accounts and brokerage securities accounts filed by the securities companies, as well as the net settlement amounts and changes in fund deposits and withdrawals, periodically calculate the balances of each securities company’s proprietary funds and brokerage funds in the settlement reserve account for each trading day, and maintain relevant records.
If a clearing company discovers that a securities office has engaged in the large-scale misappropriation of client transaction settlement funds, it shall promptly report such findings to the China Securities Regulatory Commission.
Article 20: Securities companies shall, on a monthly basis, report to the China Securities Regulatory Commission the book balance of client trading settlement funds, with a copy sent to the clearing company.
The clearing company shall, on a monthly basis, report to the China Securities Regulatory Commission the book balances of brokerage funds and proprietary funds held in each securities office’s clearing reserve account, as well as the clearing reserve funds received from securities offices and the subscription funds held in the capital verification special account.
The custodian bank shall, on a monthly basis, report to the China Securities Regulatory Commission the balance of the dedicated deposit accounts for client transaction settlement funds under its jurisdiction.
The settlement bank shall, on a monthly basis, report to the China Securities Regulatory Commission the balances of the dedicated clearing reserve deposit accounts and the capital verification accounts under its jurisdiction.
The China Securities Regulatory Commission may, as required by regulatory needs, adjust the aforementioned reporting cycle.
Article 21: Securities companies, clearing companies, custodian banks, and settlement banks shall, upon request of the China Securities Regulatory Commission or in the event of significant abnormalities arising in clients’ dedicated deposit accounts for trading settlement funds, dedicated deposit accounts for clearing reserve funds, or capital verification accounts, promptly report such matters to the CSRC.
Article 22 Securities companies shall implement centralized and unified management of clients’ trading settlement funds.
Customer transaction settlement funds received by a securities branch under a securities company shall, after setting aside sufficient daily reserve funds, be entrusted to the securities company for management.
Article 23: Client transaction settlement funds may be used solely for the settlement of clients’ securities transactions and for clients’ withdrawals.
Securities offices and clearing houses shall not provide guarantees to any third party using clients’ trading settlement funds or clearing reserve funds.
Article 24 The custodian bank, settlement bank, clearing company, and their respective staff shall maintain the confidentiality of securities trading settlement funds.
Custodian banks, clearing banks, and clearing corporations have the right to refuse any inquiries from entities or individuals, except where otherwise provided by laws or regulations, or in response to inquiries conducted in accordance with prescribed procedures by the China Securities Regulatory Commission, the securities office that opened the account, or the clearing corporation.
Chapter 4 Commercial Banks Engaged in the Custody of Client Transaction Settlement Funds
Article 25 Commercial banks engaging in the custody of client transaction settlement funds shall meet the following conditions:
(1) Commercial banks that have been certified by the People’s Bank of China as possessing adequate risk‑resilience and sound operating performance;
(2) Possesses a timely, secure, and efficient funds transfer system capable of ensuring that securities trading settlement funds within the bank’s own system are credited within two hours.
(3) Possesses sound operational procedures and protocols for the custody of securities trading settlement funds, as well as corresponding business departments and personnel;
(4) Be able to submit the relevant information pertaining to securities trading settlement funds accounts in accordance with the formats and timelines prescribed by the China Securities Regulatory Commission;
(5) Other conditions as determined by the China Securities Regulatory Commission.
Article 26 Commercial banks engaged in the custody of client transaction settlement funds are classified, according to their business counterparties, into custodial banks and settlement banks.
Article 27 Securities companies and their designated custodian banks, as well as the clearing company and its designated clearing banks, shall enter into contracts governing fund custody and agency settlement services, clearly defining the rights and obligations of both parties, and shall file such contracts with the China Securities Regulatory Commission for record.
Article 28 The custodian bank and the settlement bank shall provide prompt, secure, and accurate settlement services for the clearing of securities trading settlement funds.
Chapter V Penalties
Article 29: If a securities company or a securities branch engages in any of the following acts, it shall be ordered to make corrections within a specified time limit and shall receive public censure; in addition, it may be subject to a warning or a fine of no more than RMB 30,000, either separately or concurrently:
(1) Failure to formulate operational measures and procedures for client transaction settlement funds in accordance with these Measures;
(2) Illegally opening special deposit accounts for clients’ transaction settlement funds and special deposit accounts for proprietary funds;
(3) Failure to file with the CSRC, within the prescribed time limit, information on the custodian bank, the dedicated deposit account for client transaction settlement funds, and the dedicated deposit account for proprietary funds;
(4) Failure to promptly close customer transaction settlement funds special deposit accounts and proprietary funds special deposit accounts that are no longer in use;
(5) Failure to report the book balance of client trading settlement funds to the CSRC on a timely basis;
(6) Other acts in violation of these Measures.
Relevant persons held accountable for the conduct specified in the preceding paragraph shall be subject to public censure and, either individually or in combination, to a warning or a fine of no more than RMB 30,000.
Article 30: If a securities company or a securities branch engages in any of the following acts, it shall be ordered to make corrections within a specified time limit and shall receive public criticism; it may also be subject to a warning or a fine of no more than RMB 30,000, either separately or in combination. In cases of serious circumstances, penalties shall be imposed in accordance with Article 208 of the Securities Law:
(1) Obtaining authorization from the custodian bank or clearing company to transfer funds by means of deception, such as forging or altering the China Securities Regulatory Commission’s account registration acknowledgment;
(2) In violation of these Measures, depositing client transaction settlement funds in accounts other than the dedicated deposit account for client transaction settlement funds or the clearing reserve account;
(3) Providing guarantees for others using clients’ transaction settlement funds;
(4) Other acts in violation of these Measures.
For the relevant persons held accountable who engage in the conduct specified in the preceding paragraph, a notice of criticism shall be issued, and they may be subject to a warning or a fine of no more than RMB 30,000, either individually or in combination; in cases of serious circumstances, penalties shall be imposed in accordance with Article 208 of the Securities Law.
Article 31: If a clearing house engages in any of the following acts, it shall be ordered to make corrections within a specified time limit, receive a public reprimand, and, either individually or in combination, be subject to a warning and a fine of no more than RMB 30,000:
(1) In violation of these Measures, failure to exercise effective oversight over the remittance of clients’ transaction settlement funds;
(2) Illegally opening a dedicated deposit account for settlement reserve funds or a dedicated deposit account for proprietary funds;
(3) Failure to file with the CSRC, within the prescribed time limit, the settlement bank, the dedicated deposit account for clearing reserve funds, the dedicated deposit account for proprietary funds, and the capital verification account;
(4) Failure to promptly close liquidation special accounts and dedicated deposit accounts for proprietary funds that are no longer in use;
(5) Failure to report, on a timely basis, to the China Securities Regulatory Commission the book balances of the clearing reserve account and the capital verification special account;
(6) Other acts in violation of these Measures.
Relevant persons held accountable for the conduct specified in the preceding paragraph shall be subject to public censure and, either individually or in combination, to a warning or a fine of no more than RMB 30,000.
Article 32: If a clearing company engages in any of the following acts, it shall be ordered to make corrections within a specified time limit and shall receive public censure; it may also be subject to a warning or a fine of no more than RMB 30,000, either separately or concurrently. In cases of serious violations, penalties shall be imposed in accordance with Article 208 of the Securities Law:
(1) In violation of these Measures, depositing settlement reserve funds in accounts other than the dedicated deposit account for settlement reserve funds;
(2) Providing guarantees for others using settlement reserve funds;
(3) Violation of the provisions of Paragraph 1 of Article 18 of these Measures;
(4) Other acts in violation of these Measures.
For the relevant persons held accountable who engage in the conduct specified in the preceding paragraph, a notice of criticism shall be issued, and they may be subject to a warning or a fine of no more than RMB 30,000, either individually or in combination; in cases of serious circumstances, penalties shall be imposed in accordance with Article 208 of the Securities Law.
Article 33: If a custodian bank or its branch, or a settlement bank, engages in any of the following acts, it shall be ordered to make corrections within a specified time limit and shall receive public censure; it may also be subject to a warning or a fine of no more than RMB 30,000, either separately or in combination. In cases of serious violations, the matter shall be handled in accordance with Article 87 of the Regulations on the Supervision and Administration of Securities Companies.
(1) In violation of these Measures, failure to exercise effective oversight over the remittance of clients’ transaction settlement funds;
(2) Failing to submit to the China Securities Regulatory Commission, in accordance with the provisions of these Measures, the relevant information pertaining to the special deposit accounts for client transaction settlement funds, the special deposit accounts for clearing reserve funds, and the capital verification accounts;
(3) Other acts in violation of these Measures.
Relevant persons held accountable for the conduct specified in the preceding paragraph shall be subject to public censure and, either individually or in combination, to a warning or a fine of no more than RMB 30,000.
Article 34: If a securities company, clearing company, custodian bank, or settlement bank violates the provisions of Article 21 of these Measures by failing to report to the China Securities Regulatory Commission in a timely manner, it shall be publicly criticized and may be subject to a warning or a fine of no more than RMB 30,000, either individually or in combination.
Article 35: Staff members of custodian banks and clearing companies who disclose the secrets of securities trading settlement funds shall be subject to penalties in accordance with relevant laws, regulations, and rules.
Chapter VI Supplementary Provisions
Article 36: Interpretation:
(1) Securities trading settlement funds refer collectively to clients’ trading settlement funds, securities offices’ proprietary funds, and other funds used for securities trading.
(2) Client transaction settlement funds include funds deposited by clients to ensure full‑amount settlement, all proceeds received from the sale of securities (less brokerage commissions and other legitimate expenses), dividends, cash dividends, and bond interest earned on held securities, interest accrued on the aforementioned funds, as well as any other funds as determined by the China Securities Regulatory Commission.
(3) The designated commercial banks engaged in the custody of client transaction settlement funds refer to those commercial banks that meet the requirements set forth in these Measures and have been identified and publicly announced by the China Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission, and which handle the deposit, withdrawal, and transfer of securities transaction settlement funds while performing their supervisory functions.
(4) Custodian Bank refers to the commercial bank designated by a securities company among those authorized to provide securities trading settlement fund custody services, where the securities company deposits its clients’ transaction settlement funds.
(5) The custodian bank refers to the commercial bank designated by the securities company within the scope of the custodian bank, through which it conducts corporate settlement services for securities transactions.
(6) Settlement Bank means the commercial bank designated by the clearing company among those commercial banks authorized to provide securities‑trading settlement‑fund custody services, and which undertakes the settlement of securities‑trading settlement funds.
(7) The dedicated deposit account for client transaction settlement funds refers to a special account opened by securities companies and their securities business branches at the custodian bank, used to hold client transaction settlement funds and process settlement transfers.
(8) The dedicated deposit account for clearing reserve funds refers to the account opened by the clearing company with the settlement bank, which is used to hold the clearing reserve funds of securities companies.
(9) The dedicated deposit account for a securities company’s own funds refers to the account opened by the securities company, into which its own funds are remitted in accordance with these Measures, or from which funds received from the dedicated deposit account for clients’ trading settlement funds are credited.
(10) The settlement company’s dedicated deposit account for its own funds refers to the account opened by the settlement company, into which its own funds are remitted in accordance with these Measures, or from which funds are received from the dedicated deposit account for clearing reserve funds.
(11) The capital verification special account refers to a dedicated deposit account established by the clearing company for the purpose of verifying subscription funds during the issuance of new shares.
Article 37 Securities companies shall, in accordance with these Measures, formulate operational procedures and protocols for client transaction settlement funds and submit them to the China Securities Regulatory Commission for recordal.
Article 38: When a securities company conducts asset management business and accepts entrusted funds deposited by clients, such funds shall, for the purposes of these Measures, be managed in the same manner as client transaction settlement funds.
Article 39: The management of client transaction settlement funds for the securities business of trust investment companies shall be governed by these Measures.
Article 40: The Measures for the Administration of Transaction Settlement Funds of Foreign-Invested Shares Listed in China shall be formulated separately.
Article 41 This Measures shall come into force on January 1, 2002.

Normative documents amended by decision of the China Securities Regulatory Commission
I. In Article 4 of “Interpretation and Application of Article 39 of the Measures for the Administration of Securities Issuance by Listed Companies—‘Providing Guarantees to Third Parties in Violation of Regulations and Such Guarantees Have Not Yet Been Canceled’—Opinion No. 5 on the Application of Securities and Futures Laws,” the term “Contract Law” is hereby amended to read “Civil Code.”
II. In the preamble of the “Guiding Opinions on Hedge Strategy Funds,” amend the phrase “In order to promote the steady and sound development of hedge strategy funds and protect the legitimate rights and interests of fund unit holders, these Guiding Opinions are formulated in accordance with the Fund Management Law, the Contract Law, the Measures for the Administration of Operations of Publicly Offered Securities Investment Funds, and other relevant provisions” to read: “In order to promote the steady and sound development of hedge strategy funds and protect the legitimate rights and interests of fund unit holders, these Guiding Opinions are formulated in accordance with the Fund Management Law, the Civil Code, the Measures for the Administration of Operations of Publicly Offered Securities Investment Funds, and other relevant provisions.”
“Interpretation and Application of Article 39 of the Measures for the Administration of Securities Issuance by Listed Companies—‘Providing Guarantees to Third Parties in Violation of Regulations and Such Guarantees Have Not Yet Been Terminated’—Opinion No. 5 on the Application of Securities and Futures Laws,” along with one other normative document, have been amended accordingly pursuant to this Decision and shall be republished.
Article 39 of the Measures for the Administration of Securities Issuance by Listed Companies: Interpretation of “Providing Guarantees to Third Parties in Violation of Regulations and Such Guarantees Have Not Yet Been Canceled”
Applicable—Opinion No. 5 on the Application of Securities and Futures Laws
Article 39, Paragraph (3) of the Measures for the Administration of Securities Issuance by Listed Companies (CSRC Order No. 30, hereinafter referred to as the “Measures”) stipulates that, when applying for a non‑public issuance of shares, a listed company shall not be in a situation where “the listed company or its subsidiaries have illegally provided external guarantees that have not yet been lifted.” In the administrative licensing review process for non‑public share issuances, some listed companies and their subsidiaries typically adopt various corrective or remedial measures to terminate illegal guarantees or mitigate their adverse effects on the company. Given the diverse forms of illegal guarantees encountered in practice and the varying nature of the corrective and remedial actions taken by different companies, the legacy cases of illegal guarantees arising from major asset restructurings are particularly complex. Consequently, this has led to differing interpretations and understandings of the provision in Article 39 of the Measures concerning “illegal external guarantees that have not yet been lifted.” After careful consideration, our Commission holds that:
I. Listed companies issuing shares through a non‑public offering shall maintain a sound corporate governance structure and corresponding internal control systems, and shall rigorously manage the risks associated with external guarantees to avoid material adverse impacts on the listed company, its subsidiaries, and their shareholders, as well as any resulting financial losses.
II. The term “listed company and its subsidiaries” as defined in the Administrative Measures refers to the listed company and its controlling subsidiaries included in its consolidated financial statements.
III. The “improper external guarantees” (hereinafter referred to as “improper guarantees”) stipulated in the Administrative Measures refer to guarantees provided by a listed company and its subsidiaries to third parties in violation of applicable laws, administrative regulations, rules, normative documents issued by the China Securities Regulatory Commission, and the company’s articles of association (hereinafter collectively referred to as “relevant legal provisions”). The following circumstances constitute improper guarantees as defined in the Administrative Measures:
(1) Failure to comply with the voting procedures of the board of directors or the shareholders’ meeting as prescribed by applicable laws and regulations;
(2) When the board of directors or the shareholders’ meeting adopts a resolution on external guarantees, affiliated directors or shareholders fail to abstain from voting in accordance with applicable laws and regulations;
(3) The aggregate amount of the company’s external guarantees, or the amount of any individual guarantee, approved by the Board of Directors or the Shareholders’ Meeting exceeds the limits prescribed by the China Securities Regulatory Commission or the company’s Articles of Association;
(4) After the board of directors or the shareholders’ meeting has approved an external guarantee, the information was not disclosed in a timely manner on the designated media in accordance with the requirements of the China Securities Regulatory Commission.
(5) The independent directors failed to provide a special explanation in the annual report regarding external guarantees as required, nor did they express an independent opinion.
(6) Other external guarantee activities that violate relevant laws and regulations.
IV. The term “not yet lifted” as defined in the Administrative Measures refers to situations where, at the time a listed company submits its application for a non‑public issuance of shares, any unlawful guarantees provided by the listed company or its subsidiaries have not yet been terminated, or the associated risks and potential hazards have not yet been eliminated, thereby creating significant uncertainty regarding the safety of the interests of the listed company and its shareholders. This concept is not limited to the notion of “contract termination” under the Civil Code. The lifting of guarantee liability primarily means the cessation of the unlawful guarantee status of the listed company and its subsidiaries, the extinction of the corresponding guarantee obligations, or the implementation of effective measures by the listed company and its subsidiaries to eliminate the substantial risks and potential hazards that such unlawful guarantees pose to the listed company and its shareholders.
Prior to submitting the application documents for a non‑public issuance of shares, if, upon review, the sponsor and the issuer’s counsel find that any of the following circumstances exists, they may issue an opinion stating that the unlawful guarantee has been terminated or that the associated risks to the listed company have been eliminated:
(1) The listed company and its subsidiaries have implemented appropriate corrective measures, and the self-regulatory organization, administrative regulatory authority, or judicial authorities have pursued the legal liabilities of the violating entities and relevant personnel in accordance with the law (including initiating investigations or criminal investigations); such information has been disclosed in a timely manner.
(2) The listed company and its subsidiaries have, in accordance with the requirements of enterprise accounting standards, recognized contingent liabilities for payment obligations arising from illegal guarantees or have already assumed such guarantee liabilities; self-regulatory organizations, administrative regulatory authorities, or judicial organs have, in accordance with the law, pursued the legal liabilities of the violating entities and relevant persons (including initiating investigations or criminal investigations); and the relevant information has been disclosed in a timely manner.
(3) If the guarantee contract has not been concluded, has not taken effect, or has been declared invalid, terminated, or revoked, the listed company and its subsidiaries shall no longer be liable for the guarantee obligations or any other related indemnification liabilities.
(4) The guarantee liability has been discharged due to reasons such as the debtor having fully repaid the debt, or the creditor failing to legally demand that the listed company and its subsidiaries assume liability.
(5) Other circumstances arise whereby the guarantee no longer has a material adverse impact on the interests of the listed company and its public shareholders.
The second item of the preceding paragraph grants listed companies and their subsidiaries a certain degree of discretion, but does not encourage them to incur economic losses for the listed company and its shareholders by assuming guarantee liabilities in advance. By opting to recognize contingent liabilities, listed companies and their subsidiaries can provide investors with clearer expectations; at the same time, they should endeavor to avoid or mitigate losses through legal channels.
V. For listed companies undertaking a major asset restructuring, with respect to any illegal guarantees remaining from the pre‑restructuring period, in addition to the provisions set forth in the preceding article, the sponsor and the issuer’s counsel, upon verification and finding that one of the following circumstances exists, may issue an opinion stating that the risks and potential hazards posed by such illegal guarantees have been eliminated:
(1) Prior to the implementation of a major asset restructuring, the restructuring party was already aware of the existence of illegal guarantees. Although the illegal guarantees had not yet been lifted at the time of submitting the application for a non‑public issuance of shares, the listed company and its subsidiaries had, in accordance with enterprise accounting standards, recognized expected liabilities for the payment obligations arising from such illegal guarantees. Furthermore, self‑regulatory organizations, administrative regulatory authorities, or judicial organs had, in accordance with the law, pursued the legal liabilities of the entities and relevant personnel involved in the violations—including initiating investigations or criminal proceedings—and the relevant information had been disclosed in a timely manner.
(2) The relevant parties have executed valid legal documents stipulating that the controlling shareholder, the actual controller, or the restructuring party shall assume full liability for the principal and interest of any debts arising from the listed company and its subsidiaries due to unlawful guarantees, and that such controlling shareholder, actual controller, or restructuring party demonstrably possesses the capacity to perform its obligations.
VI. Relevant accounting offices may issue a special audit opinion on whether the listed company and its subsidiaries should recognize a provision for contingent liabilities arising from their payment obligations related to unlawful guarantees, as stipulated in Article 4, Paragraph 2, Item (2), and Article 5, Item (1), above.
VII. The professional opinions issued by sponsoring institutions and relevant securities service providers regarding whether the illegal guarantees of a listed company and its subsidiaries have been lifted constitute an important basis for regulatory authorities’ determinations. Sponsoring institutions, relevant securities service providers, and their personnel shall ensure that the conclusions of such professional opinions are clear, the underlying grounds are appropriate and sufficient, and the analysis is lucid and reasonable. In cases of non‑compliance with applicable regulations, in addition to the imposition of corresponding regulatory measures in accordance with the law, the regulatory authorities will also give heightened scrutiny to any subsequent professional opinions issued by the relevant institutions and individuals. Should sponsoring institutions, relevant securities service providers, or their personnel engage in unlawful or non‑compliant conduct, they shall be held legally liable in accordance with the law.

Guiding Opinions on Hedge Strategy Funds
To promote the steady and sound development of risk‑averse strategy funds and safeguard the legitimate rights and interests of fund unit holders, these Guiding Opinions are formulated in accordance with the Fund Management Law, the Civil Code, the Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds, and other relevant provisions.
I. For the purposes of these Guiding Opinions, a hedging‑strategy fund refers to a publicly offered securities investment fund that employs specific hedging investment strategies and incorporates relevant safeguard mechanisms, with the aim of preventing losses of the principal invested by fund unit holders upon the expiration of the hedging strategy period.
The relevant safeguard mechanisms referred to in the preceding paragraph include:
(1) The fund manager shall enter into a risk‑buyout agreement with an eligible guarantor, under which the fund manager undertakes to pay fees to the guarantor. In the event that, upon maturity of the hedging‑strategy fund, the net asset value per unit falls below the investment principal stipulated in the fund contract, the guarantor shall be responsible for making up the shortfall to the fund unit holders. The fund manager shall bear no obligation to make up such shortfall to the fund unit holders, and the guarantor shall have no right of recourse against the fund manager after having fulfilled its obligation to compensate the fund unit holders.
(2) Other safeguard mechanisms approved by the China Securities Regulatory Commission.
II. Hedge strategy funds shall specify in the fund contract, the offering prospectus, and other legal documents the method for calculating the principal invested by fund unit holders.
III. The fund manager shall fully disclose the risks associated with hedging‑strategy funds in the fund contract, the offering prospectus, and promotional materials, while also clarifying that the introduction of a safeguard mechanism does not necessarily guarantee the safety of investors’ principal; under extreme circumstances, fund unit holders may still face the risk of loss of principal.
The fund manager shall clearly and comprehensibly explain to unit holders, in the fund contract, the offering prospectus, and promotional materials, the specific arrangements of the relevant safeguard mechanisms, and shall use illustrative examples to highlight extreme scenarios in which principal losses may occur.
IV. During the hedging period, the hedging strategy fund shall not permit subscriptions or transfers-in. The fund manager shall clearly specify in the fund contract, the offering prospectus, and the fundraising promotional materials whether investors’ redemption or transfer-out of fund shares during the hedging period are eligible for shortfall‑compensation protection, and shall provide a specific risk disclosure regarding potential losses.
V. The fund contract and the offering prospectus of a risk‑averse strategy fund shall, by way of examples or other formats, clearly and concisely explain to unit holders the fund’s investment strategy and arrangements.
VI. The fund manager shall establish and improve a robust risk management system, implement effective risk management measures, and ensure that the scale of the hedging strategy fund is commensurate with its risk control capabilities and investment management expertise, thereby guaranteeing the effective implementation of the fund’s investment strategy. When applying to raise a hedging strategy fund, the applicant shall provide a detailed description in the submission materials of the establishment and implementation of the risk control framework related to the investment strategy.
VII. The fund manager shall monitor daily the cumulative net asset value per unit of the hedging strategy fund. If the cumulative net asset value per unit falls more than 2% below the investment principal stipulated in the fund contract as of the maturity date of the hedging strategy cycle, or remains below that investment principal for 20 consecutive trading days (excluding the position‑building period), the fund manager shall take timely measures, prudently determine subsequent arrangements, and report to the China Securities Regulatory Commission and the relevant local branches within three days from the date such event occurs.
The fund manager shall conduct stress tests for hedge‑strategy funds every three months, with the relevant metrics and testing procedures to be separately prescribed by the Asset Management Association of China.
VIII. The allocation of a risk‑averse strategy fund across various financial instruments shall be aligned with the fund’s investment objectives and investment strategy.
The investment strategy of a risk‑averse strategy fund shall comply with the following prudential regulatory requirements:
(1) Risk‑averse strategy funds shall invest no less than 80% of their net asset value in stable‑yield assets to generate steady returns and strive to avoid any loss of principal at maturity. Such stable‑yield assets shall include cash, bank deposits with a remaining maturity not exceeding one year of the remaining risk‑averse strategy period, interbank certificates of deposit, bond repurchase agreements, government bonds, local government bonds, policy‑based financial bonds, central bank bills, bonds with a credit rating of AAA or higher, debt financing instruments issued by non‑financial enterprises with a credit rating of AAA or higher, as well as other financial instruments approved by the China Securities Regulatory Commission.
(2) The average remaining maturity of the prudent asset portfolio shall not exceed the remaining duration of the hedging strategy cycle.
(3) The risk‑averse strategy fund shall ensure that the aggregate proportion of bank deposits and interbank certificates of deposit held with the same commercial bank that is qualified as a fund custodian does not exceed 20% of the fund’s net asset value, and that the aggregate proportion of bank deposits and interbank certificates of deposit held with the same commercial bank that is not qualified as a fund custodian does not exceed 5% of the fund’s net asset value.
(4) Assets other than stable assets are classified as risk assets. Fund managers shall establish objective research methodologies, prudently develop a pool of eligible investment targets for risk assets, and adopt appropriately diversified investment strategies.
(5) The fund manager shall prudently determine the investment proportions of risk assets. For risk assets, investments in equity‑type assets shall not exceed three times the safety cushion; investments in convertible bonds, exchangeable bonds, and fixed‑income assets with a credit rating below AA+ shall not exceed five times the safety cushion; and investments in fixed‑income assets with a credit rating of AA+ or higher shall not exceed ten times the safety cushion. The total amount invested in each category of risk assets, divided by its respective multiple cap, plus the premium paid for purchased listed options, shall not exceed the safety cushion. If, due to factors beyond the fund manager’s control—such as market volatility or changes in the fund’s size—the investment ratios of stable‑asset and risk‑asset allocations fail to comply with the requirements, the fund manager shall make adjustments within ten trading days.
The safety cushion is defined as the difference between the fund’s net asset value and the present value of the investment principal stipulated in the fund contract as of the expiration date of the hedging strategy cycle. The fund manager shall determine the discount rate by referencing the yield of interest-rate bonds with maturities comparable to those of the remaining hedging strategy cycle.
9. Where the fund manager is a securities company (including its asset management subsidiary), for hedging‑strategy funds under its management, the specific risk capital reserve shall be calculated at 12.5% of the amount that the guarantor is contractually obligated to cover in the event of a shortfall. For other hedging‑strategy funds already managed by such fund managers, the aggregate amount of shortfall‑guarantee obligations borne by the guarantor shall not exceed eight times the fund manager’s audited net assets for the most recent fiscal year.
X. Commercial banks and insurance companies that meet the following prudential regulatory requirements may serve as the guarantors of risk‑hedging strategy funds:
(1) The registered capital shall be no less than RMB 500 million;
(2) The audited net assets for the most recent year shall not be less than RMB 2 billion.
(3) The aggregate amount of liability for shortfall supplementation assumed by the risk‑avoidance strategy fund, together with the total value of guarantee assets provided to third parties, shall not exceed ten times the audited net assets of the most recent fiscal year.
(4) Has not been subject to any material penalties in the past three years;
(5) Other requirements stipulated by the China Securities Regulatory Commission.
XI. When selecting a guarantor, the fund manager shall conduct due diligence and perform a sound and objective credit assessment of the guarantor.
XII. After the fund manager enters into a risk‑buyout agreement with the guarantor, it shall not, by any direct or indirect means, make arrangements whereby the fund manager assumes liability to make up any shortfall.
13. The risk‑buyout contract shall be attached to the fund contract and the offering prospectus of the hedging strategy fund, and shall be disclosed together with such documents.
The fund contract and the offering prospectus of a risk‑averse strategy fund shall stipulate that an investor’s purchase of fund units shall be deemed to constitute consent to the terms of the risk‑buyout agreement.
14. Where the fund manager enters into a risk‑buyout agreement with the guarantor, if, upon maturity of the hedging strategy fund, the net asset value per unit falls below the investment principal stipulated in the fund contract, the fund manager may, on behalf of the fund unit holders, require the guarantor to fulfill its obligation to make up the shortfall.
15. Hedge strategy funds shall specify in the fund contract and the offering prospectus the procedures for handling the following circumstances:
(1) During the risk‑mitigation period, the party obligated to provide coverage is replaced;
(2) During the hedging period, if the guarantor encounters circumstances that are sufficient to impair its ability to make shortfall payments;
(3) During the hedging strategy period, the guarantor fails to meet the prudential regulatory requirements set forth in Article 10.
16. The risk buyout agreement shall clearly stipulate that the guarantor shall, within three business days from the date on which any of the circumstances set forth in paragraphs (2) and (3) of Article 15 occur, notify both the fund manager and the fund custodian.
The fund manager shall, within three business days from the date of becoming aware of the circumstances referred to in the preceding paragraph of this Article, propose a course of action in accordance with the provisions of the fund contract and fulfill its obligations to disclose information and to report.
17. The risk buyout agreement shall include, but not be limited to, the following provisions:
(1) The total amount of liability for shortfall supplementation assumed by the risk‑avoidance strategy fund;
(2) The period during which the obligation to make up any shortfall is borne;
(3) The scope of the obligation to make up any shortfall;
(4) The rate and payment method for risk buyout fees;
(5) The procedures and methods for fund unit holders to request the supplementation of any shortfall;
(6) After the guarantor has made up the shortfall to the fund unit holders, it shall have no right of recourse against the fund manager.
18. The fund contract and the offering prospectus of a hedging strategy fund shall include, in a separate chapter, provisions detailing the mechanisms that safeguard the fund’s hedging strategy, including but not limited to:
(1) Ensure the basic information of the obligor, including its name, domicile, and scope of business;
(2) The extent to which the obligor complies with the prudential regulatory requirements set forth in Article 10;
(3) The principal terms of the risk buyout contract;
(4) The rate and payment method for risk buyout fees;
(5) The circumstances in which the deficiency‑payment obligation applies and the circumstances in which it does not apply;
(6) The handling plan for the maturity of risk-averse strategy funds;
(7) Circumstances under which the guarantor is exempted from the obligation to make up any shortfall;
(8) Procedures for replacing the guarantor.
Any provisions in a risk‑buyout agreement that have a material impact on the interests of fund unit holders but are not disclosed in the fund contract or the offering prospectus shall not be legally binding on the fund unit holders; however, fund unit holders may assert that such provisions are legally binding on the fund manager and the guarantor.
19. The fund manager shall stipulate in the fund contract of a hedging‑strategy fund the procedures for handling the fund upon expiration of the hedging‑strategy cycle. If the fund is to be rolled over into the next hedging‑strategy cycle, the contract shall clearly set forth the conditions for such rollover and the specific mechanisms for effecting it.
Upon maturity of a hedging strategy fund, if the conditions stipulated in the contract are met and the fund is rolled over into the next hedging strategy cycle, the net asset value per unit shall be reset to RMB 1.00.
Upon expiration of the hedging strategy period, if the fund is to be converted into another type of fund, the fund contract shall clearly specify the name, fees, investment objectives, investment scope, investment strategies, and other distinguishing features of the proposed alternative fund that set it apart from the original hedging‑strategy fund.
20. Except for hedging‑strategy funds, no other fund may explicitly state in its fund contract, offering prospectus, or other legal documents, nor may it imply—through homophones, associations, or other means—that it will make up any shortfall to the principal.
21. When a fund manager applies for the registration of a hedge strategy fund, it shall comply with the requirements set forth in these Guidelines.
Mutual funds with a capital guarantee that were established prior to the entry into force of these Guiding Opinions shall be governed by the following requirements:
(1) If a fund does not comply with the provisions set forth in Article 1 of these Guiding Opinions, it shall continue to operate in accordance with the terms of its fund contract. However, upon expiration of the principal‑guaranteed period, the fund contract, the offering prospectus, and other relevant documents must be revised in compliance with the requirements of these Guiding Opinions, and the requisite procedures must be followed to re‑register the fund as a risk‑hedging strategy fund. Failure to make such revisions in accordance with these Guiding Opinions shall result in the fund being converted into another type of fund or being liquidated.
(2) If a fund fails to comply with paragraph (1) of subsection 2 of Article 8 of these Guiding Opinions, it shall not increase its holdings of assets that do not meet the prescribed requirements; if it fails to comply with paragraph (2) of subsection 2 of Article 8, it shall not extend the remaining maturity of its conservative‑asset investment portfolio; if it fails to comply with paragraph (3) of subsection 2 of Article 8, it shall not increase its holdings of bank deposits or interbank certificates of deposit that do not meet the prescribed requirements; and if it fails to comply with paragraph (5) of subsection 2 of Article 8, it shall not raise the upper limit on the safety‑margin leverage ratio. For funds that fail to meet any of the foregoing requirements, upon expiration of the principal‑preservation period, they shall, in accordance with the provisions of these Guiding Opinions, revise their fund contracts, offering prospectuses, and other relevant documents, and complete the requisite procedures to re‑register as a risk‑hedging strategy fund. Failure to make such revisions in compliance with these Guiding Opinions shall result in the fund being converted into another type of fund or being liquidated.
(3) Where the requirements of Article 9 of these Guiding Opinions are not met, the fund shall continue to be operated in accordance with the provisions of its fund contract. However, upon expiration of the principal‑guaranteed period, it must comply with the requirements set forth in these Guiding Opinions; if it fails to do so, it shall be converted into another type of fund or liquidated.
(4) Where the requirements of Article 10 of these Guiding Opinions are not met, the fund shall continue to be operated in accordance with the provisions of its fund contract. However, upon expiration of the principal‑guaranteed period, the fund contract, the offering prospectus, and other relevant documents shall be revised in compliance with the requirements set forth in these Guiding Opinions, and the requisite procedures shall be duly followed. If such revisions are not made in accordance with these Guiding Opinions, the fund shall be converted into another type of fund or liquidated.
(5) Where the requirements set forth in Articles 6 and 7 of these Guiding Opinions are not met, such cases shall be handled by reference to these Guiding Opinions from the date of their entry into force.
For principal‑protected funds that were registered prior to the effective date of these Guiding Opinions but have not yet commenced fundraising, if the provisions of their original contracts do not comply with these Guiding Opinions, they shall be amended and undergo the requisite procedures to effect a registration amendment before commencing fundraising.
22. With respect to the determination of credit ratings and remaining maturities as set forth in Article 8 of these Guiding Opinions, reference shall be made to the “Provisions on Relevant Issues Concerning the Implementation of the Measures for the Supervision and Administration of Money Market Funds” (CSRC Announcement [2015] No. 30).
Article 23: These Guiding Opinions shall take effect as of the date of their promulgation. The “Guiding Opinions on Principal‑Protected Funds” (CSRC Announcement [2010] No. 30) is hereby repealed concurrently.

Regulatory documents that the China Securities Regulatory Commission has decided to repeal

I. Rule No. 17 on the Preparation and Disclosure of Information by Companies Issuing Securities to the Public—Special Provisions on the Content and Format of Prospectuses for Foreign-Invested Joint-Stock Companies (March 19, 2002, CSRC Document No. [2002] 17)
II. Rules of Procedure for the ChiNext Expert Advisory Committee (Trial) (September 19, 2011, CSRC Announcement No. 25 [2011])
III. Notice on Standardizing the Redemption Operations of Short-Term Wealth Management Fund Products (Fund Department Notice [2012] No. 47)
IV. Guidelines on Information Disclosure Related to Profitability in the Prospectuses of Companies Issuing Shares to the Public for the First Time (CSRC Announcement [2013] No. 46, December 6, 2013)

Commercial & Corporate
The National Equities Exchange and Quotations Company held the inaugural “New Third Board Entrepreneur Training Camp” event.
To help listed companies better navigate the opportunities and challenges of the new development paradigm, establish platforms for inter‑company cooperation and exchange, and support their high‑quality growth, the National Equities Exchange and Quotations Company (NEEQ) hosted the inaugural “New Third Board Entrepreneur Training Camp” in Beijing from June 8 to 11. Nearly 60 senior executives from 36 Select Tier companies participated in the event. Zhang Mei, Deputy General Manager of the NEEQ, delivered the opening address.
Deputy General Manager Zhang Mei stated that since the establishment of the Select Tier, companies on the tier have maintained stable operations, with expectations for business growth remaining consistently positive. As China enters a new stage of development, the strategic importance of small and medium-sized enterprises has further increased. Companies on the Select Tier must seize opportunities, operate in compliance, and achieve greater growth. First, they should consolidate the foundations for corporate development and enhance the quality of standardized operations. This involves continuously strengthening the effectiveness of compliant practices and internal controls, elevating internal control standards, and establishing a modern corporate governance framework characterized by sound internal controls and effective management, thereby solidifying the micro‑level basis for accessing financial support. Second, they must earnestly fulfill their principal responsibilities, operating with integrity, trustworthiness, and compliance. Ethical business conduct is the cornerstone of an enterprise’s survival; directors, supervisors, and senior management—key stakeholders—must rigorously assume their principal duties, continually reinforcing their sense of social responsibility and commitment to compliant operations. They should not only create value for the enterprise but also contribute positively to society, vigorously promoting the entrepreneurial spirit. Third, they should capitalize on the benefits of the New Third Board reforms and focus on strengthening their core businesses. By proactively seizing policy opportunities and making effective use of available policy tools, they can sustainably drive innovation and development.
This training camp employed a variety of formats, including in-person lectures, team-building activities, site visits and exchanges, experience sharing, and group discussions. Renowned experts and scholars from leading universities, specialists from the China Securities Regulatory Commission’s Small and Medium Investor Service Center, top‑tier corporate secretaries of listed companies, founders of consulting offices, partners at accounting offices, and partners at law offices served as instructors. They delivered specialized presentations on topics such as financial technology innovation, investor relations management, board operations and best practices for corporate secretaries, capital markets and strategic growth, M&A and restructuring strategies with case studies, and the selection and application of financing instruments. During the group discussions, participants generally agreed that the program offered rich, practical content and dynamic, diverse activities, addressing both cutting-edge economic issues and real‑world business applications, yielding substantial takeaways. In addition, drawing on their companies’ post‑listing development experiences, attendees put forward suggestions and recommendations regarding the design of the Select Tier system, as well as related regulatory frameworks and support services.
Going forward, the National Equities Exchange and Quotations Company will closely align its efforts with the development needs of small and medium-sized enterprises and the key challenges they face, continuing to provide value-added training services to listed companies. By “building platforms, sharing best practices, and imparting knowledge,” the company will strive to enhance listed companies’ sense of gain and help them strengthen their overall competitiveness.

Taxation TAXATATION

Continuously deepening the tax administration reform of “delegation, regulation, and service”
Unremittingly and wholeheartedly stimulating the vitality of market entities to support high-quality development.
The State Taxation Administration has resolutely implemented the directives and requirements of the CPC Central Committee and the State Council, vigorously advancing the tax‑administration reform to streamline administration, delegate power, improve regulation, and enhance services, with each year seeing deeper progress and more thorough implementation, thereby effectively boosting the vitality of market entities.
Reducing burdens and lowering costs to ensure the sustained vitality of market entities. By cutting taxes and fees, streamlining approval processes, and simplifying documentation requirements, we have effectively reduced institutional transaction costs. During the 13th Five-Year Plan period, in close coordination with relevant departments, we rigorously implemented all tax and fee reduction policies, ensuring that policy benefits reached market players and benefited countless households. As a result, China’s cumulative new tax and fee reductions exceeded RMB 7.6 trillion, leading to a marked decline in the overall tax burden. At the same time, the number of tax-related administrative approval items was cut by 93%, and the volume of taxpayer reporting materials was reduced by 50%. In 2013, more than 6.2 million new tax‑related market entities were established nationwide, contributing RMB 160 billion in tax revenue that year. Thanks to the combined effects of macroeconomic policies such as tax and fee reductions and the “delegation, regulation, and service” reform, from the 18th National Congress of the Communist Party of China through the end of 2020, a total of 79.89 million new tax‑related market entities were registered nationwide, averaging nearly 10 million per year. In 2020, these newly established tax‑related market entities generated RMB 3.82 trillion in tax revenue, making a significant contribution to fostering steady and sound economic development in China and enhancing its share of global economic growth.
Enhancing service quality and convenience, we strive to ensure that the people‑centered “Spring Breeze” initiative remains a year‑round benefit. By adopting a strategy of “annual progressive upgrades, integrated online‑offline approaches, and coordinated internal‑external efforts,” we continuously improve the quality and efficiency of tax and fee services. For eight consecutive years, we have launched the “Tax Service Spring Breeze Campaign,” introducing a total of 418 innovative measures across 49 categories. We have promoted “non‑contact” tax filing and payment, enabling nearly 90% of tax‑related matters and 99% of tax returns to be handled online. Starting June 1 this year, we rolled out nationwide the combined filing of ten property‑and‑behavior taxes; by the end of July and by year’s end, enterprises and individuals will essentially be able to pay social security contributions entirely online or via mobile apps. We continue to deepen inter‑departmental collaboration to broaden the scope of convenient, people‑oriented services, and, in partnership with the China Banking and Insurance Regulatory Commission, we have advanced the “Tax‑Bank Interaction” program, leveraging shared taxpayer credit scores to help small and micro‑enterprises obtain unsecured loans.
Strengthening intelligent control and enforcing strict law enforcement ensures that precise, deterrent regulation remains a constant. By “leveraging data to harness collective strength, focusing on key priorities, and intensifying crackdowns,” we are fostering a fair and impartial tax environment. Relying on big‑data analytics and intelligent monitoring and early‑warning systems, we are deepening the “double random, one public” regulatory approach, establishing a new dynamic oversight mechanism based on “credit + risk.” Under this framework, entities with high credit and low risk face minimal interference; those with low credit and high risk are subject to tailored responses; emerging business models, new developments, and pressing issues in economic operations receive timely follow‑up; and industries and sectors where tax evasion is particularly prevalent—areas of strong public concern—are rigorously investigated in accordance with the law. Furthermore, we strike decisively at any signs of “fake enterprises,” “fake exports,” or “fake declarations.” Since August 2018, with robust support from the Ministry of Public Security, the General Administration of Customs, the People’s Bank of China, and other agencies, we have launched a special campaign to combat fraud and tax evasion, uncovering 378,300 enterprises suspected of issuing false invoices and defrauding the tax system. Nearly 5,000 suspects have voluntarily turned themselves in, yielding a pronounced deterrent effect.
We are fully aware that there remain numerous issues and gaps in our work. Going forward, we will steadfastly uphold Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as our guiding principle, earnestly implement the spirit of Premier Li Keqiang’s important address and the arrangements adopted at this meeting, and assume full responsibility and play our part in deepening the “delegation, regulation, and service” reform to foster and unleash the vitality of market entities, thereby contributing to the pursuit of high-quality development.
(This is the speech delivered by Director Wang Jun on June 2, 2021, at the national videoconference on deepening the “delegation, regulation, and service” reform and vigorously fostering and stimulating the vitality of market entities.)

Litigation & Arbitration

Interim Measures for the Implementation of Recovery and Resolution Plans for Banking and Insurance Institutions
China Banking and Insurance Regulatory Commission
Interim Measures for the Implementation of Recovery and Resolution Plans for Banking and Insurance Institutions
CBIRC Document No. 16 [2021]
Chapter I General Provisions
Article 1: In order to establish a mechanism for the recovery and resolution of banking and insurance institutions, prevent and defuse major risks, ensure the uninterrupted continuation of critical business operations and services, achieve orderly recovery and resolution, protect the legitimate rights and interests of financial consumers and the public interest, and maintain financial stability, these Measures are formulated in accordance with the Banking Supervision and Administration Law of the People’s Republic of China, the Commercial Bank Law of the People’s Republic of China, the Insurance Law of the People’s Republic of China, the Company Law of the People’s Republic of China, and other relevant laws and regulations.
Article 2: For the purposes of these Measures, a recovery plan refers to a contingency plan pre‑formulated by banking and insurance institutions and approved by the China Banking and Insurance Regulatory Commission and its branch institutions. In the event of a material risk, such a plan is intended primarily to address capital and liquidity shortfalls through market‑based mechanisms, including internal measures and shareholder support, thereby restoring the institution’s ability to continue operating.
The “disposal plan” referred to in these Measures means a response plan pre‑proposed by banking and insurance institutions and approved by the China Banking and Insurance Regulatory Commission and its branch offices. When the recovery plan fails to effectively mitigate significant risks facing such institutions, or when circumstances arise that could give rise to regional or systemic risks, the implementation of this plan shall facilitate orderly resolution and safeguard financial stability.
Recovery and resolution plans serve as operational guidelines for banking and insurance institutions, the CBIRC, and its local branches in crisis scenarios; however, the implementation of other recovery and resolution measures in such scenarios is not precluded.
Article 3: Bank and insurance institutions establishing recovery and resolution planning mechanisms shall adhere to the following basic principles:
(1) Principle of Lawful and Orderly Implementation. Recovery and resolution plans shall be formulated and implemented in accordance with statutory powers and procedures, fully safeguarding the legitimate rights and interests of all parties as well as the public interest, thereby ensuring orderly recovery and resolution and maintaining financial stability.
(2) Principle of Self‑Rescue First. Recovery and resolution plans shall prioritize the use of a bank or insurance institution’s own assets and shareholder support, among other market‑based financing channels, to undertake self‑rescue measures. Such self‑rescue resources must meet requirements for eligibility and adequacy. Only when self‑rescue proves ineffective and could trigger regional or systemic risks, thereby jeopardizing financial stability, may the relevant authorities, in accordance with the law and in a manner that minimizes costs, proceed with resolution.
(3) Principle of Prudence and Effectiveness. Recovery and resolution plans shall fully take into account the characteristics of the relevant industry and various stress scenarios, be aligned with the actual conditions of banking and insurance institutions and the specific features of the local financial market, feature clear procedures, contain concrete provisions, and be both reliable and operationally feasible.
(4) Principle of Division of Labor and Cooperation. The formulation and implementation of recovery and resolution plans shall be underpinned by a clear allocation of responsibilities. Banking and insurance institutions, together with their shareholders, shall rigorously fulfill their respective principal and shareholder obligations. Relevant departments shall strengthen overall coordination, strictly enforce their statutory duties, and pool their efforts to achieve synergy.
Article 4: Banking and insurance institutions that meet the following conditions shall, in accordance with the requirements of these Measures, formulate recovery and resolution plans:
(1) Commercial banks, rural credit cooperatives, and other financial institutions that accept public deposits, as well as financial asset management companies and financial leasing companies, whose adjusted on- and off-balance-sheet assets (the denominator of the leverage ratio), calculated on a consolidated basis, reached RMB 300 billion or more (including equivalent foreign currency) as of the end of the previous year;
(2) Insurance groups (holding companies) and insurance companies whose consolidated on‑balance‑sheet total assets, as of the end of the previous year, reach RMB 200 billion or more (including equivalent foreign currency);
(3) Other banking and insurance institutions that, although not meeting the aforementioned criteria, are designated by the China Banking and Insurance Regulatory Commission and its branch institutions to develop recovery and resolution plans based on factors such as their business characteristics, risk profile, and spillover effects.
Where both a banking or insurance institution and its holding group meet the aforementioned criteria, they shall generally each develop separate recovery and resolution plans under the coordination of their respective holding group. However, where an insurance group (holding) company and its affiliated insurance companies both satisfy the aforementioned conditions, in principle, the insurance group (holding) company shall formulate a unified recovery and resolution plan.
Article 5: The recovery and resolution plan shall take into account the specific operating environment of banking and insurance institutions, comprehensively reflecting the institution’s nature, size, as well as the complexity, interconnectedness, and substitutability of its business activities. By systematically identifying the institution’s risk areas and vulnerabilities, the plan shall effectively enhance transparency, reduce complexity, strengthen self‑rescue capabilities, and safeguard against systemic risks.
Recovery and resolution plans should separately assess stress scenarios for individual banking and insurance institutions or their holding groups, as well as for the financial system as a whole, while taking into account the potential cross‑market, cross‑industry, and cross‑border transmission of risks in crisis situations. Where necessary, banking and insurance institutions should adjust the assumptions underlying their stress‑testing scenarios or introduce additional stress scenarios.
Article 6: Banking and insurance institutions shall establish an information management system that is aligned with their recovery and resolution plans, ensuring the timely collection and reporting of relevant information required for the formulation, approval, exercise, and resolvability assessment of such plans.
Article 7: Banking and insurance institutions shall establish a governance framework for recovery and resolution plans that is commensurate with their own circumstances, and shall clearly define the processes for developing, approving, and updating such plans.
Recovery and resolution plans formulated or updated by banking and insurance institutions shall be subject to approval by the board of directors, unless otherwise provided by the China Banking and Insurance Regulatory Commission. The board of directors bears ultimate responsibility for the formulation and updating of such plans, while senior management assumes managerial accountability, and shareholders bear shareholder responsibilities in accordance with applicable laws, regulations, and the articles of association.
Banking and insurance institutions shall designate a dedicated committee or specific department to oversee the management of recovery and resolution plans, and establish internal assessment and accountability mechanisms.
Article 8 The CBIRC and its branch institutions shall assume regulatory responsibilities for the formulation and implementation of recovery and resolution plans by banking and insurance institutions.
The CBIRC and its branch institutions shall, in accordance with the law, share the recovery and resolution plans of banking and insurance institutions with the People’s Bank of China, the Deposit Insurance Fund Management Agency, the securities regulatory authorities, the fiscal authorities, and local governments.
The CBIRC and its local branches shall coordinate with relevant departments to provide support, in accordance with their statutory duties, for the formulation and implementation of recovery and resolution plans by banking and insurance institutions.
Chapter 2: Recovery Plan
Article 9: The objective of the recovery plan is to enable banking and insurance institutions to resume normal operations by implementing appropriate measures in the event of a material risk scenario.
Article 10 The main contents of the recovery plan shall include, but not be limited to: an overview of the business operations and organizational structure; the governance framework for implementing the recovery plan; identification of critical functions, core business lines, and key entities; stress testing; trigger mechanisms; recovery measures; a communication strategy; as well as obstacles to the execution of the recovery plan and recommendations for improvement.
The specific elements of the recovery plan may be appropriately adjusted, based on the type of institution and its unique characteristics, with reference to Annex 1, “Recovery Plan Example (Commercial Bank Version),” and Annex 2, “Recovery Plan Example (Insurance Company Version),” attached to these Measures.
Article 11: Banking and insurance institutions that are formulating a recovery plan for the first time shall, by the end of August of the following year, submit such plan to the China Banking and Insurance Regulatory Commission and its local branches in accordance with the division of regulatory responsibilities.
If a recovery plan is not approved, the CBIRC and its local branches shall submit written comments within two months from the date of receipt of the plan. Banking and insurance institutions shall, in accordance with the requirements, complete the necessary revisions and resubmit the plan within the time limits prescribed by the CBIRC and its local branches.
Article 12: Bank and insurance institutions whose recovery plans for the previous year have been approved by the CBIRC and its local branches shall complete the annual update by the end of August each year and submit it to the CBIRC and its local branches in accordance with the division of regulatory responsibilities.
If the updated recovery plan is not approved, the CBIRC and its local branches shall submit written comments within two months from the date of receipt of the plan. Within the time limit prescribed by the CBIRC and its local branches, banking and insurance institutions shall make the required revisions and resubmit the plan.
When significant changes occur in the governance structure, business model, or external environment, or when the CBIRC and its local branches deem it necessary, banking and insurance institutions shall promptly update their recovery plans and submit them in accordance with the aforementioned requirements, ensuring that such plans remain aligned with the institution’s operational risk profile.
Banking and insurance institutions shall, under the guidance of the China Banking and Insurance Regulatory Commission and its local branches, strengthen the implementation and testing of their recovery plans to enhance their operability and effectiveness.
Article 13: When a banking or insurance institution encounters a material risk and meets the criteria for activating its recovery plan, it may, upon approval by the board of directors or an authorized representative thereof, initiate the implementation of the recovery plan and, in accordance with relevant regulations, report to the China Banking and Insurance Regulatory Commission and its local branches within 24 hours of such approval.
Where deemed necessary by the China Banking and Insurance Regulatory Commission and its branch institutions, they may, on their own initiative, require banking and insurance institutions to activate and implement recovery plans, which such institutions shall comply with.
Chapter 3: Disposal Plan
Article 14: The objective of the resolution plan is to ensure that, through a pre‑established resolution framework, banking and insurance institutions—when they are unable to continue operating or, even after implementing a recovery plan, still cannot mitigate material risks—can be resolved in a swift and orderly manner, while maintaining the continuity of critical business operations and services throughout the resolution process, thereby safeguarding financial stability.
Article 15 The principal contents of the proposed resolution plan shall include, but not be limited to: a general overview of the institution’s operational status and organizational structure; the governance framework for implementing the resolution plan; identification of key functions, core business lines, and material entities; sources of funding and funding arrangements for the resolution; the information and data required for the implementation of the resolution plan; the implementation roadmap and communication strategy; the impact of the resolution on the local economy and the broader macroeconomic and financial landscape; as well as any obstacles to implementation and recommendations for improvement.
The specific elements of the resolution plan recommendations may be appropriately adjusted, taking into account the type of institution and its unique characteristics, with reference to Annex 3, “Sample Resolution Plan Recommendations (Commercial Bank Version),” and Annex 4, “Sample Resolution Plan Recommendations (Insurance Company Version),” attached to these Measures.
Article 16: Banking and insurance institutions that are formulating a resolution plan for the first time shall, by the end of August of the following year, submit their proposed resolution plans to the China Banking and Insurance Regulatory Commission and its local branches in accordance with the division of regulatory responsibilities.
If a proposed resolution plan is not approved, the CBIRC and its local branches shall submit written comments within two months from the date of receipt of the proposal. Banking and insurance institutions shall, in accordance with the relevant requirements, complete the necessary revisions and resubmit the plan within the time limits prescribed by the CBIRC and its local branches.
The CBIRC and its local branches shall, in accordance with the recommendations of the resolution plan and within the scope of their statutory powers and division of responsibilities, comprehensively consider factors such as the allocation of resolution resources, and, in consultation with relevant departments, formulate a resolution plan for banking and insurance institutions.
Article 17: Bank and insurance institutions whose previous disposal plan recommendations have been approved by the CBIRC and its local branches shall update such plans every two years and submit them, in accordance with the division of regulatory responsibilities, to the CBIRC and its local branches by the end of August each year.
If the proposed update to the resolution plan is not approved, the CBIRC and its local branches shall submit written comments within two months from the date of receipt of the proposal. Within the time limit prescribed by the CBIRC and its local branches, banking and insurance institutions shall, as required, complete the necessary revisions and resubmit the plan.
When significant changes occur in the governance structure, business model, or external environment, or when the CBIRC and its local branches deem it necessary, banking and insurance institutions shall promptly update their resolution plan proposals and submit them in accordance with the aforementioned requirements.
The CBIRC and its local branches shall update their resolution plans at least every two years, fully taking into account changes in the economic and legal environments facing banking and insurance institutions as well as the financial system as a whole, so as to enhance the feasibility and effectiveness of these plans.
Article 18: If the implementation of a bank or insurance institution’s recovery plan fails to effectively mitigate material risks or may give rise to regional or systemic risks, thereby necessitating the activation of a resolution plan, the matter shall be addressed in accordance with statutory authority and risk‑resolution responsibilities, with the China Banking and Insurance Regulatory Commission and its branch institutions, in coordination with relevant departments, taking appropriate measures.
During the resolution process, responsibilities must be clearly defined: while safeguarding the bottom line and preventing regional and systemic risks, it is also essential to ensure compliance with the law and mitigate moral hazard, thereby achieving effective and orderly resolution.
Chapter Four: Supervision and Administration
Article 19 The CBIRC and its branch institutions shall, in coordination with relevant departments, conduct regular resolvability assessments.
A resolvability assessment refers to the ongoing evaluation of whether a bank or insurance institution’s organizational structure, business model, and other factors are conducive to the implementation of its resolution plan.
Article 20: The resolvability assessment shall focus on the feasibility and reliability of implementing the resolution plan, as well as on the areas where banking and insurance institutions need to improve in order to enhance their resolvability.
The resolvability assessment shall cover, but not be limited to, the following: whether the resolution framework and resolution tools are lawful and feasible; whether the sources of resolution funding and the associated funding arrangements are clearly defined; whether the methodology for identifying the critical functions of banking and insurance institutions is appropriate; whether critical functions can remain operational during resolution; whether the organizational structure and management information systems can support resolution; whether arrangements for coordination, cooperation, and information sharing are viable; whether the proposed resolution measures are well aligned with the actual circumstances; whether measures adopted at a particular stage might impede the effectiveness of other measures; and the potential impacts of resolution on the local economy as well as on the broader macroeconomic and financial system.
The CBIRC and its local branches may, based on the results of the resolvability assessment, adjust the frequency of updates to the resolution plan and implement differentiated management.
Article 21: When a banking or insurance institution undergoes significant changes such as mergers, acquisitions, or reorganizations, the CBIRC and its local branches shall promptly assess any resulting changes in its resolvability.
Article 22: To enhance the resolvability of banking and insurance institutions, where necessary, the CBIRC and its branch institutions may, in accordance with the law, adopt regulatory measures requiring such institutions to alter their business practices, adjust their organizational structures, and take other appropriate actions, so as to remove obstacles to resolution, reduce the difficulty and costs of resolution, and improve the effectiveness of resolution.
Article 23 The CBIRC and its branch institutions shall, in accordance with the division of regulatory responsibilities, strengthen guidance and supervision over banking and insurance institutions. By formulating and updating recovery and resolution plans, they shall reinforce the principle that banking and insurance institutions and their shareholders should prioritize self-rescue, and continuously enhance the institutions’ risk management capabilities and their ability to prevent and resolve risks.
Article 24: If a banking or insurance institution fails to formulate and update its recovery and resolution plan in accordance with the requirements of these Measures, the CBIRC and its branch institutions shall, in accordance with the law, order it to make corrections within a specified time limit. If the institution fails to comply within the prescribed period, or if its conduct seriously jeopardizes the sound operation of the institution and infringes upon the legitimate rights and interests of financial consumers, the relevant regulatory measures may be imposed or administrative penalties may be imposed in accordance with the law.
Article 25: Where banking and insurance institutions may give rise to regional or systemic risks, a crisis management task force comprising relevant departments and local governments may be established to jointly deliberate and decide on appropriate response measures.
Article 26. In order to implement recovery and resolution plans to address significant risks and safeguard financial stability, the CBIRC may, in accordance with the law, grant exemptions from certain regulatory requirements to banking and insurance institutions.
Chapter V Supplementary Provisions
Article 27: For the purposes of these Measures, “banking and insurance institutions” refer to commercial banks, rural credit cooperatives, and other financial institutions that accept public deposits, as well as financial asset management companies, financial leasing companies, and insurance companies, all established within the territory of the People’s Republic of China.
An insurance company refers to a company established within the territory of the People’s Republic of China, including life insurance companies, property insurance companies, reinsurance companies, and other entities engaged in commercial insurance business.
Article 28: With respect to global systemically important financial institutions, domestic systemically important financial institutions, and the like, where regulatory requirements concerning recovery and resolution plans are otherwise prescribed, such provisions shall prevail.
Trust companies, finance companies, auto finance companies, consumer finance companies, financial asset investment companies, bank wealth management subsidiaries, insurance asset management companies, and other financial institutions supervised by the China Banking and Insurance Regulatory Commission and its branch institutions within the territory of the People’s Republic of China shall, by analogy, be subject to the provisions of these Measures.
Article 29: Where a banking or insurance institution has overseas branches, such branches shall, in accordance with the requirements of the host country’s or region’s regulatory authorities and subject to compliance with the parent company’s resolution strategy, formulate and implement recovery and resolution plans. The formulation and implementation of the parent company’s recovery and resolution plan shall be conducted under the guidance of the China Banking and Insurance Regulatory Commission and its local offices or crisis management teams, and coordination with the host country’s or region’s regulators shall be ensured through mechanisms such as the establishment of joint regulatory meetings, so as to ensure the lawful and effective implementation of the recovery and resolution plans both domestically and abroad.
Foreign‑owned banks and foreign‑owned insurance companies operating in China shall, subject to domestic laws, regulations, and supervisory requirements, develop local recovery and resolution plans and submit corresponding proposals, in alignment with their parent companies’ or groups’ recovery and resolution frameworks. Under the guidance of the CBIRC and its branch offices, as well as cross‑border regulatory cooperation mechanisms such as crisis management groups, they shall ensure effective coordination with their parent companies or groups, thereby enabling the lawful and efficient implementation of these recovery and resolution plans both within and outside China.
Article 30 This Measures shall enter into force as of the date of its promulgation. Any provisions in previously issued relevant measures that are inconsistent with these Measures shall be implemented in accordance with the provisions of these Measures.

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