Investor Protection-Rules, Risk Knowledge "Case 20.

-- Learn the new securities law and be a smart investor.

What are the provisions of the new Securities Law of 1. on the investor suitability system? Why should we distinguish between ordinary investors and professional investors?

The new Securities Law provides separate regulatory requirements for securities companies and investors. For securities firms, it is generally about understanding customers, revealing risks, and clarifying the seller's responsibilities. For investors, they should cooperate with the securities company and provide true personal information in accordance with the express requirements of the securities company. If it refuses to provide or fails to provide information as required, the securities company shall inform it of the consequences and refuse to sell securities or provide services to it in accordance with the provisions. In addition, the new "Securities Law" also distinguishes between ordinary investors and professional investors, with the purpose of providing more adequate protection for ordinary investors with relatively low risk tolerance and relatively insufficient investment expertise and professional capabilities. At the same time, a "reversal of the burden of proof" mechanism has been set up. When ordinary investors have disputes with securities companies, securities companies should prove that their actions comply with laws, administrative regulations and the provisions of the securities regulatory authority under the State Council, and there is no misleading or fraud. If the securities company cannot prove it, it shall bear the corresponding liability.

What kind of collection system for the exercise of shareholders' rights on behalf of listed companies has been established in the new 2. Securities Law?

The collection system for the exercise of shareholders' rights on behalf of listed companies helps small and medium-sized investors overcome time and cost constraints, better participate in corporate governance activities, and actively express their opinions on the company's operation and management. In this regard, the new Securities Law has made specific provisions from five aspects: first, the subject of solicitation. it is clear that the board of directors of listed companies, independent directors, shareholders holding more than 1% voting shares, or investor protection institutions established in accordance with laws, administrative regulations or the provisions of the securities regulatory body of the State Council (hereinafter referred to as investor protection institutions) can be the solicitor. Second, the way of solicitation, clearly by the solicitor himself or entrusted securities companies, securities service institutions, publicly request the shareholders of listed companies to entrust them to attend the general meeting of shareholders, and on behalf of the exercise of the right to propose, voting rights and other shareholders' rights. Third, information disclosure, clear solicitors should disclose the solicitation documents, listed companies should cooperate. Fourth, it is prohibited to act, and it is clear that the rights of shareholders shall not be publicly solicited in a paid or disguised manner. Fifth, legal liability, clear violations of the public collection of shareholders' rights, resulting in losses suffered by the listed company or its shareholders, shall be liable for compensation in accordance with the law.

How does the new Securities Law of 3. improve the cash dividend system of listed companies?

In recent years, the securities regulatory authorities have continued to strengthen system construction, actively guided and promoted listed companies to pay cash dividends through multiple measures and channels, and achieved remarkable results. In order to improve the cash dividend system of listed companies, on the one hand, the new Securities Law stipulates that listed companies should specify the specific arrangements and decision-making procedures for the distribution of cash dividends in their articles of association, and protect shareholders' right to return on assets in accordance with the law; on the other hand, if the after-tax profits of listed companies make up for losses and withdraw statutory provident funds, cash dividends shall be distributed in accordance with the provisions of the articles of association.

How does the new 4. Securities Act protect bond investors and bondholders?

First, the new Securities Law provides that a meeting of bondholders should be established for the public offering of corporate bonds. Secondly, it is clarified that the issuer of the public offering of bonds shall employ a bond trustee, and the bond trustee shall perform his duties diligently and impartially, and shall not harm the interests of bondholders. Finally, in order to effectively respond to the default of the bond issuer, the bond trustee may accept the bondholder's entrustment to initiate and participate in civil litigation or liquidation proceedings on behalf of the bondholder in its own name.

How does the new 5. Securities Act provide for the advance payment system?

The new Securities Law defines the system of advance compensation, making it clear that if the issuer causes losses to investors due to fraudulent issuance, false statements or other major illegal acts, the controlling shareholder, actual controller and relevant securities company of the issuer may entrust an investor protection agency to reach an agreement with the investors who have suffered losses on compensation matters and pay compensation in advance. After the first payment, it may be recovered from the issuer and other joint and several responsible persons in accordance with the law.

6. in the new Securities Law, how does the investor protection agency play a role in multiple dispute resolution?

Investor protection institutions are of great significance in taking advantage of their professional advantages to protect investors and actively advocate and exercise rights on behalf of investors. The new Securities Law specifies three mechanisms for investor protection agencies to resolve disputes on behalf of investors. The first is the mediation mechanism. In case of disputes between investors and issuers, securities companies, etc., both parties can apply to the investor protection agency for mediation. If an ordinary investor has a securities business dispute with a securities company and the ordinary investor makes a request for mediation, the securities company shall not refuse. The second is to support litigation. Investor protection agencies can support investors to file lawsuits in the people's courts for acts that harm the interests of investors. The third is derivative litigation. The issuer's directors, supervisors, and senior managers violate laws, administrative regulations, or the company's articles of association when performing their duties, causing losses to the company, and the issuer's controlling shareholders and actual controllers infringe on the company's legitimate rights and interests. If the company causes losses, the investor protection agency holds the company's shares, it can file a lawsuit in the people's court in its own name for the company's interests, the shareholding ratio and shareholding period are not subject to the provisions of Article 151 of the the People's Republic of China Company Law on "holding more than 1% shares of the company alone or in the aggregate for more than 180 consecutive days.