Article 26 The securities regulatory authority under the State council or the
department as authorized by the State Council shall, where finding any decision
on approving securities issuance fails to comply with the relevant statutory
requirements and procedures and if the relevant securities haven't been issued,
revoke the decision on approval and terminate the issuance. As to any securities
that have been issued but haven't been listed, the relevant decision on approval
for issuance shall be revoked. The relevant issuer shall, according to the
issuing price plus interests as calculated at the bank deposit rate for the
corresponding period of time, return the funds to securities holders. A
recommendation party shall bear the joint and several liabilities together with
the relevant issuer, except for one who is able to prove his exemption of fault.
Where any controlling shareholder or actual controller has any fault, he shall
bear the joint and several liabilities together with the relevant issuer,
Article 27 After a legal offer of stocks, an issuer shall be liable for any
alteration of its operation or its profits by itself. The investment risk as
incurred therefrom shall be borne by investors by themselves.
Article 28 Where an issuer issues any securities to any non-specified object
and if the said securities shall be underwritten by a securities company, as is
provided for by laws and administrative regulations, the issuer shall conclude
an underwriting agreement with a securities company. The forms of "sale by
proxy" and "exclusive sale" shall be adopted for the underwriting operation of
securities. The term "sale by proxy" refers to an underwriting form, whereby a
securities company sells securities as a proxy of the relevant issuer and, upon
the conclusion of the underwriting period, returns all the securities unsold to
the relevant issuer. The term "exclusive sale" refers to an underwriting form,
whereby a securities company purchases all of the securities of an issuer
according to the agreement there between or purchases all of the residing unsold
securities by itself upon the conclusion of the underwriting period.
Article 29 An issuer that makes public issuance of securities has the right
to select a securities company for underwriting according to law at its own
will. A securities company may not canvass any securities underwriting business
by any unjust competition means.
Article 30 Where a securities company underwrites any securities, it shall
reach an agreement with the relevant issuer on sale by proxy or exclusive sale,
which shall indicate the following items:
(1) The name, domicile as
well as the name of the legal representative of the parties
concerned;
(2) The classes, quantity, amount as well as issuing prices
of the securities under sale by proxy or exclusive sale;
(3) The term
of sale by proxy or exclusive sale as well as the start-stop date;
(4)
The means and date of payment for sale by proxy or exclusive sale;
(5)
The expenses for and settlement methods of sale by proxy or exclusive
sale;
(6) The liabilities of breach; and
(7) Any other matter
as prescribed by the securities regulatory authority under the State
Council.
Article 31 A securities company that is engaged in the underwriting of
securities shall carry out verification on the authenticity, accuracy and
integrity of the financing documents of public issuance. Where any false record,
misleading statement or major omission is found, no sales activity may be
carried out. Where any securities have been sold out under the foregoing
circumstances, the relevant sales activity shall be immediately terminated and
measures for correction shall be taken.
Article 32 Where the total face value of securities as issued to
non-specified objects is beyond RMB 50 million yuan, the said securities shall
be underwritten by an underwriting syndicate. An underwriting syndicate shall be
composed of securities companies acting as principal underwriters and
participant underwriters.
Article 33 The term for sale by proxy or exclusive sale may not exceed 90
days at the most. A securities company shall, within the term of sale by proxy
or exclusive sale, guarantee the priority of the relevant subscribers in
purchasing securities under sale by proxy or exclusive sale. A securities
company may not reserve in advance any securities under sale by proxy thereby or
purchase in advance and sustain any securities under exclusive sale thereby.
Article 34 Where any stock is issued at a premium, the issuing price thereof
shall be agreed on through negotiation of the relevant issuer and the securities
company that is engaged in underwriting.
Article 35 As to a public offer of stocks through sale by proxy, when the
term of sale by proxy expires and if the quantity of stocks fails to reach 70 %
of the planned quantity in a public offer, it shall be deemed as a failure. The
relevant issuer shall return the issuing price plus interests as calculated at
the bank deposit rate for the contemporary period of time to the subscribers of
stocks.
Article 36 In a public offer of stocks, when the term for sale by proxy or
exclusive sale expires, an issuer shall report the information on stock issuance
to the securities regulatory authority under the State Council for archival
purpose within the prescribed time.
Chapter III Transaction of
Securities
Section I General Provisions
Article 37 The securities as purchased and sold by any party who is involved
in any securities transaction shall be the securities that have been legally
issued and delivered. No securities that have been illegally issued may be
purchased or sold.
Article 38 All stocks, corporate bonds or any other securities that have been
legally issued, where there are any restrictive provisions of laws on the term
of transfer thereof, may not be purchased or sold within the restrictive
term.
Article 39 All stocks, corporate bonds or any other securities that have been
publicly issued according to law shall be listed in a stock exchange as legally
established or in any other places for securities transaction as approved by the
State Council.
(For more biz stories, please visit Industry Updates)
