Halfway to Effective Shareholder Protection
February 28, 2003 | BY
clpstaff &clp articlesFalse profit statements and other forms of misrepresentation have plagued China's securities markets for years. A new SPC regulation directs the government's efforts to clean up the markets.
On January 9 2003, the PRC Supreme People's Court (the SPC) promulgated the Trial of Civil Damages Cases Arising from Misrepresentation in the Securities Market Several Provisions (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) (the Provisions), which entered into effect on February 1 2003. To a large extent, the Provisions are a logical extension and development of last year's regulation of a similar nature adopted by the SPC, the Questions Concerning the Acceptance of Civil Tort Dispute Cases Arising from Misrepresentation in the Securities Market Circular (the Circular, issued and effective January 15 2002). However, the Provisions have substantially expanded and systematized the content of the Circular.
Background
In order to have a better understanding of the Provisions, it is necessary to have a brief review of regulatory issues in China's stock markets in recent years. In a sense, both the Provisions and the Circular can be viewed as a direct but rather cursory response to a general outcry against rampant and outrageous fraud and market manipulation.
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