CHINA: An Introduction to Securities: Litigation (PRC Firms)

Along with the building of a centralised and professionalised trial system, PRC courts take further steps to develop and perfect the alternative dispute resolution system

继集中化、专业化审理机制后，法院进一步深化、完善多元化纠纷解决机制 

In recent years, the courts all over the country have continued to build and perfect the alternative dispute resolution system for disputes over securities and futures. Taking Shanghai Financial Court and Beijing Financial Court as representative examples, the courts all over the country are completing alternative dispute resolution system by enhancing the whole process of diversified alternative dispute resolution system as “Exemplary Judgement + Professional Meditation + Judicial Recognition”, to improve the efficiency of handling dispute over securities, especially for class action cases.

近年来，全国法院持续开展证券期货纠纷多元化解机制建设和完善工作。以上海金融法院、北京金融法院为代表，全国各地法院不断完善多元化纠纷解决机制，推行“法院示范判决+专业调解组织调解+调解协议司法确认”全链条的证券纠纷多元化解决机制，并希望提高证券纠纷案件，尤其是群体性证券纠纷案件的处理效率。

Rules of law application on ABS dispute cases tend to be unified; types of securities disputes become more comprehensive

资产支持证券纠纷法律适用规则趋于统一，证券诉讼领域涉及的证券品种更加全面 

Apart from traditional stocks and bonds, the types of securities disputes have become more varied in recent years and new types of securities disputes such as disputes over ABS are emerging. For example, in 2023 the Shanghai Financial Court concluded the first civil case in China on fraudulent issuance of ABS. To standardise and unify the application of the rule of law to this new type of securities case, the rules on handling ABS dispute cases have been discussed and made by the Nationwide Financial Trail Working Conference held in January 2023.

除传统股票、债券外，证券诉讼领域涉诉证券品种呈现多样化态势，资产支持证券等新型证券纠纷持续出现。例如，上海金融法院在2023年审结了中国首例资产支持证券欺诈发行民事赔偿案。为规范和统一该类新型证券纠纷案件的法律适用，2023年1月召开的全国法院金融审判工作会议专门作出了资产支持证券纠纷案件的审理规则。

Progress on the implementation of the principle that civil compensation liabilities take precedence over administrative penalties in securities disputes

民事赔偿责任比行政处罚在证券争议上优先获得清偿的原则进一步落实 

In July 2022, the SEC and the Finance Ministry jointly made and released the “Provisions on Relevant Matters Concerning Firstly Using the Properties of Those with Securities-related Violations to Assume Civil Compensation Liability”, which provides that for those who are in violation of the PRC Securities Law, the liquidation of civil liability takes precedence over the administrative liabilities of fines and asset confiscation. In the first case regarding the implementation of this principle, the court has taken preservation measures against funds in criminal cases involving securities market manipulation, which is primarily used in bearing the civil liability of compensation.

2022年7月，中国证监会与财政部联合制定并发布《关于证券违法行为人财产优先用于承担民事赔偿责任有关事项的规定》，对于违反《证券法》的相关行为人，需同时承担民事赔偿责任、缴纳罚没款行政责任的，民事赔偿责任优先获得清偿。在司法实践层面，在全国首例落实民事赔偿责任优先的证券侵权案中，法院对操纵证券市场刑事案件中的相应款项进行了保全，该等款项可优先用于承担民事判决中的赔偿责任。

The Investor Protection Agency begins to employ the shareholder subrogation litigation system provided for in the new Securities Law; the first case of this type has been concluded

投资者保护机构开始实施新《证券法》中的股东代位诉讼制度，首例案件顺利结案 

Because listed companies have numerous and dispersed small and medium-sized shareholders, and are subject to the shareholding ratio requirements for shareholder subrogation lawsuits under the PRC Corporation Law, it is difficult for small and medium-sized shareholders to use this system to pursue accountability on behalf of listed companies from directors, supervisors and senior executives who harm the company's interests. To this end, Article 94 of the new Securities Law revised in 2019 gives investor protection agencies that hold shares of listed companies the right to initiate shareholder subrogation lawsuits, without being subject to the shareholding ratio restrictions of the PRC Corporation Law. In February 2023, the country's first institutional shareholder subrogation lawsuit initiated by the Investor Protection Agency, which held only 100 shares of a listed company, was successfully concluded, and the investor protection institutional shareholder subrogation lawsuit system stipulated in the new PRC Securities Law was implemented.

因上市公司中小股东众多且分散，受限于《公司法》股东代位诉讼持股比例要求，中小股东难以运用该制度代表上市公司向损害公司利益的董监高追责。为此，2019年修订的新《证券法》第94条赋予了持有上市公司股份的投资者保护机构提起股东代位诉讼的权利，不受《公司法》持股比例限制。2023年2月，由仅持有上市公司100股股票的投服中心发起的全国首单投保机构股东代位诉讼顺利结案，新《证券法》规定的投资者保护机构股东代位诉讼制度开始实施。

Securities class actions continue to be implemented, and courts are making representative judgments

证券集团诉讼持续实施，法院作出代表性判决 

In terms of securities group litigation, in 2023, following the "Kangmei Pharmaceutical" case, the "Zeda Yisheng" case was applied by the Investment Services Centre to start a new class action litigation procedure. This case is also the first securities misrepresentation dispute case on the SSE STAR Market, and The first case to include IPO placement objects within the scope of protection. In addition, the first-instance verdict of the "LeTV" false statement case involving more than 2,000 investors was released, ruling that LeTV should compensate investors for losses of CNY2.04 billion, which aroused social concern.

证券集团诉讼方面，2023年，继“康美药业”案之后，“泽达易盛”案由投服中心申请启动新型集团诉讼程序，该案同时也是科创板首例证券虚假陈述纠纷案，以及首例将IPO配售对象纳入保护范围的案件。此外，涉及2000余名投资人的“乐视网”虚假陈述案件一审判决出炉，判决乐视网赔偿投资者损失20.4亿元，引发社会关注。