State Council, Regulations for the Oversight of Securities Companies

Promulgated: April 23 2008
Effective: June 1 2008

Applicability: The “business of margin trading and short sale of securities” refers to the securities companies' business activities of lending funds to clients for purchase of securities or lending securities to clients for selling, and the provision of the corresponding collateral by clients, in the course of securities transactions conducted in stock exchanges or other stock trading premises approved by the State Council (Article 48).

Main Contents: Shareholders of securities companies shall make capital contributions in currency or in non-currency property required for business operations by the company. The total amount of capital contributions of the shareholders in the form of non-currency property may not exceed 30% of the company's registered capital. The aforementioned provision shall not apply to the conversion of claims of the company's creditors to company equity in the course of the company's operations. Capital contributions of the shareholders shall be verified by an accounting firm with securities- and futures-related business qualifications, which shall issue a certificate. The non-currency property contributed shall be valued by an asset valuation institution with securities-related business qualifications (Article 9).