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关于审理证券市场因虚假陈述引发的民事赔偿案件的若干规定 Trial of Civil Compensation Cases Arising from False Representation in the Securities Market Several Provisions

2006-05-13 09:38   我要纠错 | 打印 | 收藏 | | |

法释[2003]2号

(Promulgated by the Supreme People's Court on 9 January 2003 and effective as of 1 February 2003.)

颁布日期:20030109  实施日期:20030201  颁布单位:最高人民法院

  These Provisions are formulated in accordance with laws and regulations such as the PRC, Civil Law General Principles, the PRC, Securities Law, the PRC, Company Law and the PRC, Civil Procedure Law, and in light of the actual circumstances of the securities market and adjudication practice in order to correctly try civil compensation cases arising from false representation in the securities market, regulate civil acts in the securities market and protect the lawful rights and interests of investors.

  1. GENERAL PROVISIONS

  Article 1 For the purposes of these Provisions, the term “civil compensation cases arising from false representation in the securities market” (Securities False Representation Civil Compensation Cases) shall refer to civil compensation cases brought before the people's court by investors in the securities market who have incurred losses because of false representation in violation of the laws and regulations by those obliged to disclose information.

  Article 2 For the purposes of these Provisions, the term “investors” shall refer to natural persons, legal persons or other organizations engaging in securities subscriptions or transactions in the securities market.

  For the purposes of these Provisions, the term “securities market” shall refer to the primary market on which the issuer offers shares to the public, the market on which securities are traded through the quotation systems of securities exchanges, the market on which securities companies transfer shares as an agent, and other securities markets whose establishment has been approved by the State.

  Article 3 These Provisions shall not apply to civil litigation cases arising from the following transactions:

  1. transactions taking place outside securities markets whose establishment has been approved by the State; and

  2. transactions by way of transfer on securities markets whose establishment has been approved by the State.

  Article 4 When hearing Securities False Representation Civil Compensation Cases, a people's court shall emphasize mediation and encourage conciliation between the parties involved.

  Article 5 The statute of limitation for bringing civil compensation actions against the party making false representations shall be governed by Article 135 of the Civil Law General Principles, and the action shall commence from the following dates:

  1. the date on which the China Securities Regulatory Commission or its agency publishes its decision on the penalty to be imposed on the party making false representations;

  2. the date on which the PRC Ministry of Finance, other administrative authority or authorities with the power to issue administrative penalties publish(es) the decision on the penalty to be imposed on the party making false representation; or

  3. the effective date of the criminal judgment in the case of a party making false representation that has not been subjected to administrative penalty, but has been declared guilty by the people's court.

  Where two or more administrative penalties are imposed on different parties making false representation for the same false representation or where both administrative and criminal penalties have been imposed, the statute of limitation for civil compensation action shall commence from the date of publication of the first administrative penalty decision or the effective date of the criminal judgment.

  2. ACCEPTANCE AND JURISDICTION

  Article 6 Where an investor, on the grounds of injury incurred by himself, institutes civil compensation proceedings against the party making the false representation on the basis of the administrative penalty decision of the relevant authority or the written criminal judgment of the people's court, the people's court shall accept the case provided that it complies with Article 108 of the Civil Procedure Law.

  Investors that institute securities false representation civil compensation proceedings shall submit the following evidence in addition to submitting the administrative penalty decision or announcement, or the written criminal judgment of the people's court:

  1. documentation proving the identity of the natural person, legal person or other organization; where the original cannot be provided, a notarized copy of the document shall be submitted; and

  2. evidentiary materials showing investment losses, such as certificate of transaction, etc.

  Article 7 The defendant in Securities False Representation Civil Compensation Cases shall be the party making the false representation, including:

  1. persons with actual control, such as sponsor(s) and controlling shareholder(s);

  2. the issuer or listed company;

  3. the securities distributor;

  4. the securities listing sponsor;

  5. professional intermediary service institutions such as accounting firms, law firms and asset valuation institution, etc.;

  6. the senior management personnel such as the responsible directors, supervisors and managers of work units listed in Items (2), (3) and (4) above, and the directly responsible persons of the institutions listed in Item (5) above; and

  7. other organizations or natural persons that have made false representation.

  Article 8 Securities False Representation Civil Compensation Cases shall fall under the jurisdiction of the intermediate people's court of cities, cities with independent development plan or special economic zone at the seat of the local people's government of a province, municipality directly under the central government or autonomous region.

  Article 9 Where an investor institutes securities false representation civil compensation proceedings against multiple defendants, jurisdiction shall be determined in accordance with the following principles:

  1. the competent intermediate people's court of the place where the issuer or listed company is located shall have jurisdiction, except in circumstances listed in Paragraph Two of Article 10 hereof.

  2. where proceedings are instituted against parties making false representation other than the issuer or the listed company, the competent intermediate people's court of the place where the defendant is located shall have jurisdiction.

  3. where the defendant is a natural person, the competent intermediate people's court of the place where the defendant is located shall have jurisdiction.

  Article 10 After a people's court has accepted a case of false representation where the defendant is not the issuer or listed company, it may, on the application of the parties involved or with the agreement of all the plaintiffs, add the issuer or the listed company as a co-defendant. Once this has been done, the people's court shall transfer the case to the competent intermediate people's court of the place where the issuer or listed company is located.

  If no party makes this request or the plaintiffs do not agree, but the people's court deems the addition necessary, it shall notify the issuer or the listed company that it is a co-defendant in the case, but may not transfer the case.

  Article 11 If, after a people's court has accepted a Securities False Representation Civil Compensation Case, the party subjected to administrative penalty is dissatisfied with such penalty and applies for an administrative review or institutes administrative proceedings, the people's court may rule to suspend the trial.

  If, after the people's court has accepted a Securities False Representation Civil Compensation Case, the relevant administrative penalty is revoked, the people's court shall rule to terminate the proceedings.

  3. FORMS OF LITIGATION

  Article 12 Plaintiffs in Securities False Representation Civil Compensation Cases covered hereby may institute legal proceedings independently or jointly.

  Article 13 If multiple plaintiffs institute legal proceedings against the same defendant for the same false representation and there are both independent and joint actions, the people's court may notify the plaintiffs instituting independent action to participate in the joint action.

  If multiple plaintiffs simultaneously institute two or more joint actions against the same defendant for the false representation, the people's court may merge them into one joint action.

  Article 14 The number of plaintiffs in a joint action shall be determined before the hearing is held. In cases where there is a large number of plaintiffs, the plaintiffs may appoint between two and five representatives. Each representative may appoint one to two agents ad litem.

  Article 15 Plaintiffs' representatives shall, upon special authorization of the plaintiffs they represent, attend the hearing, modify or withdraw claims, and engage in mediation or reach mediation agreements with the defendant, on behalf of the plaintiffs.

  Article 16 When the people's court rules that a defendant shall bear the civil liability for compensation to a large number of plaintiffs, it may decide the total amount of compensation in the text judgment and append a list of each plaintiff's name, the amount to be awarded, etc. to the end of the written civil judgment.

  4. DETERMINATION OF FALSE REPRESENTATION

  Article 17 The term “false representation in the securities market” shall refer to acts whereby parties with information disclosure obligations, in the course of issue or trading of securities, violate securities laws and regulations by recording falsehoods or making misleading statements in respect of major events that are contrary to the truth of the facts, or by major omissions when disclosing information or making information disclosure in an inappropriate manner.

  “Major events” shall be defined in light of Articles 59, 60, 61, 62 and 72 of the Securities Law and by the content of relevant provisions.

  The term “recording falsehoods” shall refer to acts whereby a party with information disclosure obligations records facts that do not exist in an information disclosure document when disclosing information.

  The term “misleading statements” shall refer to statements made by a party making false representation in information disclosure documents or through the media, causing investors to misjudge their investments, thus creating major impact.

  The term “major omissions” shall refer to the failure by parties with information disclose obligations to record, fully or partially, information that is required to be recorded in the information disclosure documents.

  The term “making information disclosure in an inappropriate manner” shall refer to the failure by parties with information disclose obligations to publicly disclose information that shall be disclosed within the appropriate time limit or in the statutory manner.

  Article 18 In any of the following circumstances, the people's court shall determine that a causal relationship exists between the false representation and the injurious result:

  1. where the securities in which the investor invested were directly linked to the false representation;

  2. where the investor purchases the securities on or after the date on which the false representation is made and before it is exposed or corrected; or

  3. where the investor incurs losses as a result of the sale of securities, or as a result of continuing to hold the securities on or after the date on which the false representation was exposed or corrected.

  Article 19 The people's court shall determine that no causal relationship exists between the false representation and the injurious result if the defendant produces evidence proving that:

  1. the plaintiff has sold the securities before the date of exposure or correction of the false representation;

  2. the plaintiff has made the investment on or after the date of exposure or correction of the false representation;

  3. the plaintiff has made the investment with the knowledge of the false representation;

  4. the loss or part of the loss incurred by the plaintiff has been caused by other factors such as risk in the securities market system; or

  5. the plaintiff made the investment in bad faith or for the purpose of manipulating the price of the securities.

  Article 20 For the purposes of these Provisions, the term “the date on which false representation is made” shall refer to the date on which the false representation is made or occurs.

  The term “the date of exposure of false representation” shall refer to the date on which the false representation is first publicly exposed in medium such as newspaper, periodicals, radio or television that is distributed or broadcast nationwide.

  The term “the date of correction of false representation” shall refer to the date on which the party making the false representation announces a correction of the false representation and carries out the procedures for suspension of trading in accordance with provisions in a medium designated by the China Securities Regulatory Commission.

  5. LIABILITY AND EXEMPTION FROM LIABILITY

  Article 21 The sponsor, issuer or listed company shall undertake civil liability for compensation incurred by the investor as a result of his/its false representation.

  Senior management personnel such as the responsible directors, supervisors and managers, etc. of the issuer or listed company shall undertake the joint and several liability for compensation for losses as referred to in the preceding paragraph. However, where there is evidence proving that they were not at fault, they shall be exempted from liability.

  Article 22 Where a person with actual control manipulates an issuer or listed company to violate the provisions of securities laws by making false representation in the name of the issuer or listed company, causing losses to investors thereby, the liability for compensation may be borne by the issuer or listed company. After the issuer or listed company has borne the liability for compensation, it may seek compensation from the person with actual control.

  Where a person with actual control makes false representation in violation of Article 4, 5 or 188 of the Securities Law, causing losses to investors thereby, the person with actual control shall be liable for compensation.

  Article 23 Securities distributors and securities listing sponsors shall be liable for compensation for losses caused to an investor due to false representation. However, where there is evidence proving that they were not at fault, they shall be exempted from liability.

  Senior management personnel such as the responsible directors, supervisors and managers shall undertake the joint and several liability for compensation borne by securities distributors and securities listing sponsors. The cause for exemption of liability shall be as stipulated in the preceding paragraph.

  Article 24 Where professional intermediary service institutions and their directly responsible persons make false representation in violation of Article 161 or 202 of the Securities Law, causing losses to investors thereby, they shall be liable for compensation for the proportion of the loss they caused. However, where there is evidence proving that they were not at fault, they shall be exempted from liability.

  Article 25 Other organizations or natural persons that have made false representations, as specified in Paragraph Seven of Article 7 hereof, in violation of Article 5, 72, 188 or 189 of the Securities Law, causing losses to investors thereby, shall be liable for compensation.

  6. JOINT TORT LIABILITY

  Article 26 Where a sponsor provides a guarantee for information disclosure by an issuer, the sponsor and issuer shall undertake joint and several liability for compensation for losses incurred by investors.

  Article 27 Where a securities distributor, securities listing sponsor or professional intermediary service organization knows or should have known that the issuer or listed company has made false representation but fails to make rectification or issue a qualified opinion and a joint tort has been constituted, it shall undertake the joint and several liability for losses incurred by the investor.

  Article 28 If the senior management personnel such as the responsible directors, supervisors or managers etc. of an issuer, listed company, securities sponsor or securities listing sponsor are any of the following circumstances, they shall be determined as making joint false representation and shall undertake the joint and several liability with the issuer, listed company, securities sponsor or securities listing sponsor for losses incurred by investors:

  1. they participate in the false representation;

  2. they know, or should have known, of the false representation and fail to expressively indicate an objection; or

  3. other circumstances for which they are responsible.

  7. RECOGNITION OF LOSSES

  Article 29 Where a party making false representation on the securities issue market causes losses to an investor, the investor has the right to request compensation from the party making the false representation in accordance with Article 30 hereof. If the false representation leads to a suspension of the issuance of the securities, the investor has the right to request the party making false representation to refund and compensate for any paid share capital and the interest incurred at the bank interest rate for current deposits for the same period.

  Article 30 The scope of civil liability for compensation of a party making false representation on the securities market is limited to the actual loss incurred by the investors as a result of the false representation. Actual losses incurred by investors include:

  1. investment differential loss; and

  2. the commission and stamp duty for investment differential loss.

  Interest on the capital in the above paragraph shall be calculated at the bank interest rate for current deposits for the same period from the date of purchase to the sale of the securities or the base date.

  Article 31 Where an investor sells the securities on or before the base date, the investment differential loss shall be calculated based on the difference between the average purchase price of the securities and the actual average price at which the securities are sold, multiplied by the quantity of securities held by the investor.

  Article 32 Where the investor sells or retains the securities after the base date, the investment differential loss shall be calculated based on the difference between the average purchase price and the average closing price on each trading day from the date of exposure or correction of the false representation to the base date, multiplied by the quantity of securities held by the investor.

  Article 33 The term “the base date for calculation of investment differential loss” shall refer to a cut-off date stipulated for the purpose of limiting the compensation within the scope of loss incurred as a result of false representation, by deciding a reasonable time period for the calculation of loss after the false representation has been exposed or corrected. The base date shall be determined according to the following respectively:

  1. the date of exposure or correction of the false representation to the date on which the accumulated trading volume of the securities affected by the false representation reached 100% of the negotiable securities; but the trading volume of securities transferred by way of block-trade agreements shall not be included in the calculation.

  2. the thirtieth trading day after the date of exposure or correction of the false representation if the date stated in the previous provision cannot be decided before the court hearing.

  3. one trading day prior to the date on which the securities were delisted if the securities have already been withdrawn from the market.

  4. one trading day prior to the date of suspension of the securities if trading in the securities has already been suspended; if trading has been resumed, the base date shall be determined according to Item (1) of this Article.

  Article 34 The income from the period for which an investor held shares based on his shareholder status, including profit shares, bonus shares, shares obtained from conversion of common reserve funds, and shares of rights issue, additional share issue and assigned shares purchased by the investor with his funds during the period in which he held shares, shall not be offset against the amount of compensation paid by the party making the false representation.

  Article 35 When calculating investment differential loss in the case of securities whose rights have been excluded, the price and quantity of securities shall be calculated as if the rights had been restored.

  8. SUPPLEMENTARY PROVISIONS

  Article 36 These Provisions shall be effective as of 1 February 2003.

  Article 37 These Provisions shall take precedence over any provisions in the Questions Concerning the Acceptance of Civil Tort Dispute Cases Arising from False Representation in the Securities Market Circular issued by this Court on 15 January 2002 that are not in accord with these Provisions.

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