Supreme People's Court, Trial of Civil Compensation Cases Arising from False Representation in the Securities Market Several Provisions

Promulgated: January 9 2003
Effective: February 1 2003
Applicability: "Investors" is defined as a natural person, legal person or other organization that engages in subscription or trading of securities in a securities market (Article 2). "Securities market" is defined as the issuing market where an issuer offers shares to the public, the market where securities trading is conducted through a price reporting system of a stock exchange, the market where securities companies handle assignment of shares on behalf of their clients and other securities markets approved by the State (Article 2).
Where inconsistency arises between the Questions Concerning the Acceptance of Civil Tort Dispute Cases Arising from False Representation in the Securities Market Circular and these Provisions, these Provisions shall prevail (Article 37).

Main contents: The Provisions state that the people's court should accept cases filed by an investor against such defendants as the issuer, controlling shareholder, listed company and securities distributor for false representation if such cases conform with Article 108 of the Civil Procedure Law (Articles 6 and 7). The Provisions further detail the forms of litigation, determination of false representation, reasons for liability or exemption, joint tort liability and determination of losses.
Related legislation: PRC Civil Law General Principles, Apr 12 1986; PRC Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p31; PRC Civil Procedure Law (2nd Revision) and PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21