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AboutShijiazhuang Tonghe Electronic Technology Co., Ltd. is a high-tech enterprise dedicated to technological innovation, product innovation, and management innovation in the power electronics industry. It integrates R&D, manufacturing, sales, and service in the power electronics sector, providing customers with comprehensive energy solutions. -
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《Criminal Law Amendment (XI)》— Provisions on Securities and Futures Crimes
Release time:
Jun 30,2021
On December 26, 2020, the Eleventh Amendment to the Criminal Law of the People's Republic of China was officially adopted and came into effect on March 1, 2021. This amendment significantly increases the criminal penalties for four types of securities and futures crimes: fraudulent issuance, falsification of information disclosure, provision of false certification documents by intermediary agencies, and market manipulation. It is of great significance for further raising the cost of securities-related violations and crimes, effectively protecting the legitimate rights and interests of investors, smoothly advancing the registration-based system, preventing and resolving financial risks, and better ensuring the steady and healthy development of the capital market.
1. Crime of fraudulent issuance of stocks and bonds
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New regulations |
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Article 160 [Crime of Fraudulent Issuance of Stocks and Bonds]
If, in the prospectus, subscription documents, or regulations for raising funds through corporate or enterprise bonds, important facts are concealed or significant false information is fabricated, and stocks or corporate/enterprise bonds are issued as a result, with the amount involved being substantial, the consequences being serious, or other serious circumstances present, the offender shall be sentenced to imprisonment of up to five years or detention, and also fined an amount ranging from one percent to five percent of the illegally raised funds, either concurrently or separately.
If a unit commits the crime mentioned in the preceding paragraph, the unit shall be fined, and its directly responsible person in charge and other persons directly liable shall be sentenced to a fixed-term imprisonment of no more than five years or detention. |
Article 160 [Crime of Fraudulent Issuance of Stocks and Bonds]
If, in offering documents such as prospectuses, subscription agreements, and regulations for the issuance of corporate and enterprise bonds, important facts are concealed or significant false information is fabricated, and stocks, corporate or enterprise bonds, depositary receipts, or other securities recognized by the State Council according to law are issued, and the amount involved is huge, the consequences are severe, or other serious circumstances exist, the offender shall be sentenced to a fixed-term imprisonment of no more than five years or criminal detention, and shall also be fined either jointly or separately. If the amount involved is exceptionally large, the consequences are exceptionally severe, or other exceptionally serious circumstances exist, the offender shall be sentenced to a fixed-term imprisonment of more than five years and also fined.
If the controlling shareholder or actual controller organizes or directs others to commit the acts described in the preceding paragraph, they shall be sentenced to a fixed-term imprisonment of no more than five years or criminal detention, and fined an amount ranging from 20% to 100% of the illegally raised funds, either concurrently or separately. If the amount involved is particularly huge, the consequences are particularly severe, or other particularly serious circumstances exist, the offender shall be sentenced to a fixed-term imprisonment of more than five years and fined an amount ranging from 20% to 100% of the illegally raised funds.
If a unit commits the crimes specified in the preceding two paragraphs, it shall be fined an amount ranging from 20 percent to one time the illegally raised funds. The directly responsible person in charge and other persons directly liable shall be punished according to the provisions of Paragraph 1.
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Key revision points:
( 1) Significantly increase the severity of penalties:
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New regulations |
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The maximum sentence is five years of fixed-term imprisonment. The fine for individuals involved in illegal fundraising is 1% to 5% of the funds involved. The fine for entities engaging in illegal fundraising is 1% to 5% of the funds involved.
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The maximum sentence is 15 years of imprisonment. Individuals engaging in illegal fundraising will be fined, and the 5% cap will be abolished. The fine for entities engaging in illegal fundraising is 20% to 100% of the funds involved. |
( 2) The scope of securities issuance documents has been expanded to include false information disclosures in other stock and bond issuance documents beyond the prospectus, subscription agreements, and regulations governing the issuance of corporate and enterprise bonds, bringing them within the scope of criminal regulation.
( 3) Include depositary receipts and other securities recognized by the State Council in accordance with law within the scope of regulation under the crime of fraudulent issuance of stocks, thereby providing a legal basis for future efforts to crack down on fraudulent issuance of depositary receipts and other securities, and ensuring alignment with the new Securities Law.
( 4) Strengthen criminal accountability for the “key few.” Given the critical role played by controlling shareholders and actual controllers in fraudulent issuance crimes, we have placed particular emphasis on holding these individuals accountable under criminal law for organizing and directing such fraudulent issuance activities.
2. Crime of Illegally Disclosing or Failing to Disclose Material Information
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Article 161 [Crime of Illegally Disclosing or Failing to Disclose Material Information] Companies and enterprises that, in accordance with the law, have an obligation to disclose information shall provide shareholders and the general public with false financial accounting reports or conceal material facts therein; or fail to disclose other important information required by law as prescribed. If such actions seriously harm the interests of shareholders or other persons, or involve other serious circumstances, the directly responsible principal personnel and other persons bearing direct responsibility shall be sentenced to a fixed-term imprisonment of no more than three years or criminal detention, and also fined between 30,000 yuan and 200,000 yuan, either jointly or separately.
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Article 161 [Crime of Illegally Disclosing or Failing to Disclose Material Information] Companies and enterprises that, in accordance with the law, have an obligation to disclose information shall provide shareholders and the general public with false financial accounting reports or conceal material facts therein; or fail to disclose other important information required by law as prescribed. If such actions seriously harm the interests of shareholders or other persons, or involve other serious circumstances, the directly responsible principal officers and other persons directly liable shall be sentenced to a fixed-term imprisonment of no more than five years or criminal detention, together with a fine or a single fine. In cases involving particularly serious circumstances, the offenders shall be sentenced to a fixed-term imprisonment of more than five years but no more than ten years, together with a fine.
If the controlling shareholder or actual controller of a company or enterprise specified in the preceding paragraph commits or organizes, directs, or instigates the commission of the acts described in the preceding paragraph, or if such person conceals relevant matters resulting in the occurrence of the circumstances stipulated in the preceding paragraph, they shall be punished in accordance with the provisions of the preceding paragraph. If the controlling shareholder or actual controller who commits the crime specified in the preceding paragraph is an entity, the entity shall be fined, and its directly responsible principal personnel and other persons directly liable shall be punished in accordance with the provisions of the first paragraph.
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Key revision points:
( 1) Significantly increase the severity of penalties:
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Old rules |
New regulations |
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The maximum penalty under the criminal law is three years’ fixed-term imprisonment; The fine amount ranges from 20,000 to 200,000 yuan.
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The maximum penalty under the criminal law is 10 years’ imprisonment. Impose a fine and remove the upper limit of 200,000 yuan.
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( 2) Strengthen criminal accountability for the “key few.” Given the critical role played by controlling shareholders and actual controllers in violations of information disclosure regulations, we have placed particular emphasis on strengthening the pursuit of special criminal liability against controlling shareholders and actual controllers who commit or organize, or instruct others to commit, criminal acts of improper information disclosure.
3. Crime of Manipulating Securities and Futures Markets
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Old rules |
New regulations |
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Article 182 [Crime of Manipulating Securities and Futures Markets]
If any of the following circumstances exist and the manipulation of the securities or futures markets is serious, the offender shall be sentenced to imprisonment of up to five years or detention, together with a fine or a single fine; if the circumstances are particularly serious, the offender shall be sentenced to imprisonment of more than five years but less than ten years, together with a fine: (1) Individually or in collusion, concentrating financial advantages, shareholding or position advantages, or leveraging informational advantages to jointly or continuously buy and sell securities or futures contracts, thereby manipulating the prices or trading volumes of such securities or futures; (2) Colluding with others to engage in securities and futures trading at a pre-agreed time, price, and manner, thereby influencing the prices or trading volumes of securities and futures; (3) Engaging in securities trading between accounts under one’s actual control, or engaging in self-dealing by buying and selling futures contracts for one’s own account, thereby influencing the prices or trading volumes of securities and futures; (4) Manipulating the securities and futures markets by other means.
If a unit commits the crime specified in the preceding paragraph, the unit shall be fined, and its directly responsible person in charge and other persons directly liable shall be punished in accordance with the provisions of the preceding paragraph. |
Article 182 [Crime of Manipulating Securities and Futures Markets]
Any of the following circumstances, involving manipulation of the securities or futures markets and thereby influencing the prices or trading volumes of securities or futures contracts, where the circumstances are serious, shall be punishable by imprisonment of up to five years or detention, together with a fine either concurrently or separately; where the circumstances are particularly serious, the offender shall be sentenced to imprisonment of more than five years but less than ten years, together with a fine: (1) Individually or in collusion, concentrating financial resources, holding a dominant shareholding or position, or leveraging informational advantages to engage in joint or consecutive buying and selling; (2) Colluding with others to engage in securities and futures trading with each other at a pre-agreed time, price, and manner; (3) Engaging in securities transactions between accounts under their actual control, or trading futures contracts by buying and selling them for their own account; (4) Frequently or massively placing buy and sell orders for securities and futures contracts without the intent to complete the transaction, and then canceling those orders; (5) Inducing investors to engage in securities and futures trading by using false or uncertain material information; (6) Making public evaluations, forecasts, or investment recommendations on securities, issuers of securities, or underlying assets for futures trading, while simultaneously engaging in reverse securities transactions or related futures transactions; (7) Manipulating the securities and futures markets by other means.
If a unit commits the crime specified in the preceding paragraph, the unit shall be fined, and its directly responsible person in charge and other persons directly liable shall be punished in accordance with the provisions of the preceding paragraph. |
Key revision points:
Drawing on the provisions of the new Securities Law, we will further clarify the handling of newly emerging market manipulation practices. Criminal liability will be pursued for new types of market manipulation behaviors such as “spoofing,” “pump-and-dump” schemes, and “scalping.”
4. Crime of providing false certification documents; crime of issuing certification documents with serious inaccuracies
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Old rules |
New regulations |
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Article 229 [Crime of Providing False Certifying Documents; Crime of Issuing Certifying Documents with Serious Inaccuracies] Personnel of intermediary organizations entrusted with responsibilities such as asset valuation, capital verification, validation, accounting, auditing, and legal services, who intentionally provide false certification documents under serious circumstances, shall be sentenced to a fixed-term imprisonment of no more than five years or detention, together with a fine. If the personnel referred to in the preceding paragraph solicit property from others or illegally accept property from others while committing the crime specified in the preceding paragraph, they shall be sentenced to a fixed-term imprisonment of no less than five years but no more than ten years, together with a fine.
Persons specified in the first provision who are seriously irresponsible and issue certificates containing material false statements, thereby causing serious consequences, shall be sentenced to a fixed-term imprisonment of no more than three years or criminal detention, and shall also be fined either jointly or separately. |
Article 229 [Crime of Providing False Certifying Documents; Crime of Issuing Certifying Documents with Serious Inaccuracies] Personnel of intermediary organizations entrusted with responsibilities such as asset valuation, capital verification, validation, accounting, auditing, legal services, sponsorship, safety assessment, environmental impact assessment, and environmental monitoring—when intentionally providing false certification documents under serious circumstances—shall be sentenced to a fixed-term imprisonment of no more than five years or criminal detention, together with a fine. If any of the following circumstances exist, the offender shall be sentenced to a fixed-term imprisonment of more than five years but less than ten years, together with a fine: (1) Providing false certification documents related to securities issuance, such as asset valuation, accounting, auditing, legal services, and underwriting, where the circumstances are particularly serious; (2) Providing false certification documents related to major asset transactions, such as asset appraisals, accounting reports, and audit reports, where the circumstances are particularly serious; (3) Providing false certificates such as safety assessments or environmental impact assessments in major projects and undertakings involving public safety, thereby causing particularly serious losses to public property, national interests, and the interests of the people. If the conduct described in the preceding paragraph also involves soliciting property from others or illegally accepting property from others and constitutes a crime, the offender shall be convicted and punished according to the provision with the heavier penalty. Persons specified in the first provision who are seriously irresponsible and issue certificates containing material false statements, thereby causing serious consequences, shall be sentenced to a fixed-term imprisonment of no more than three years or criminal detention, and shall also be fined either jointly or separately. |
Key revision points:
Strengthen the responsibilities of intermediaries such as sponsors. “Gatekeeper” responsibilities: The sponsor shall be treated as the perpetrator of the crime of providing false certification documents and the crime of issuing certification documents with material inaccuracies, and criminal liability shall be pursued under these offenses.
Amendment (XI) to the Criminal Law is another major legislative initiative involving the capital market, following the new Securities Law. Consistent with the spirit of the new Securities Law—strengthening penalties for securities law violations—it adopts a problem-oriented approach, highlights key priorities, and aligns with the registration-based reform centered on information disclosure. Against the backdrop of advancing the reform of the registration system for initial public offerings of stocks, this amendment reflects the nation’s commitment. We are firmly committed to adopting a “zero-tolerance” approach to cracking down on securities and futures crimes, effectively raising the cost of illegal activities in the securities and futures markets through criminal liability, protecting the legitimate rights and interests of investors, maintaining market order, and ensuring the stable, healthy, and sustainable development of the market.
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