Top Chinese Court Issues Guidance on Punishing ChiNext Crimes

Source: Regulation Asia Editors, Regulation Asia 2020-08-20

The “zero tolerance” guidance came days before the first batch of companies are set to debut under ChiNext’s new registration-based system.

China’s Supreme People’s Court has issued new guidance on how criminal activity related to ChiNext’s new registration-based IPO system should be handled by the legal system.

The guidance is aimed at ensuring consistent and unified rulings and decisions across the judiciary, in line with the government’s “zero tolerance” stance on criminal conduct in the capital markets. Courts have been instructed to ensure severe punishment for securities-related crimes.

The guidance says the fraudulent issuance of stocks and bonds, non-disclosure of important information, and provision of false supporting documents shall be investigated for criminal responsibility. It also seeks to ensure all kinds of fraud and corruption crimes that occur during the issuance and registration of ChiNext securities are severely punished.

Criminal responsibility will be investigated for issuers and intermediaries who collude to conceal important facts or fabricate material false information in securities issuance documents, as well as in cases where issuance review and registration staff use their position for personal gain, including the acceptance of bribes.

Severe penalties shall be imposed for illegal disclosure, non-disclosure of important information, insider trading, trading with undisclosed information, market manipulation, and breaches of trust which damage the interests of listed companies, the guidance says.

The guidance came less than a week before the first batch of companies are set to debut under ChiNext’s new registration-based system on 24 August.

Similar guidance was issued last year for Shanghai’s STAR Market, which launched in June 2019 and pioneered the IPO registration-based system.

fraud

market manipulation

Top Chinese Court Issues Guidance on Punishing ChiNext Crimes

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