On May 15, 2025, the Supreme People’s Court (SPC) and the China Securities Regulatory Commission (CSRC) co-issued the Guiding Opinions on Ensuring the High-Quality Development of the Capital Market Through Strict and Impartial Law Enforcement and Judicial Services (the "Opinions").
The Opinions provide 23 guiding opinions with the target task at “better playing to the synergy between judicial adjudication and securities and futures regulation, improving the system of rules for judicial adjudication in the capital market, etc.” for the capital market reform and development.
The Opinions states to further enhance the awareness of investor protection and continue to optimize the good market ecology in which investors are “willing to come, stay and develop well”, which include: a. effective and comprehensive protection of the legitimate rights and interests of all investors; b. promoting the quality of listed companies through case adjudication; c. countering fraudulent issuance and continuous disclosure falsification in accordance with the law; d. improving the civil liability system for misrepresentation; e. facilitating investors to safeguard their legitimate rights and interests in accordance with the law; f. playing the role of investor protection agency; g. regularization of representative litigation in securities disputes; h. implementation of a system of prioritization of civil liability.
For instance, it mentions that the people's court shall protect the investors' right to information, participation in major decision-making and selection of managers and other rights to participate in corporate governance, the receipt of dividends from the company, sharing the capital appreciation brought about by the growth of the company and other property income, as well as participation in the market in a fair manner, on the basis of obtaining true, accurate and complete information of the public disclosure and the real price signals, and to trade, in accordance with the law, when it hears a case.
The Opinions provides to regulate the behavior of securities and futures fund operators and other market participants in accordance with the law and promote the high-quality development of the capital market on all fronts, which include: a. regulating the organization and conduct of securities and futures fund management institutions in according with law; b. regulating the development of private equity fund market in according with law; c. improving the judicial rules of multi-level capital market; d. supporting industry self-regulatory organizations to perform their duties in accordance with the law; e. guaranteeing high-level institutionalized opening of the capital market; f. leading the purification of capital market ecology; and g. preventing and resolving capital market risks.
The Opinions further specifies to “continuously optimize and improve the mechanism of judicial and regulatory coordination, and enhance the effectiveness of the system in assisting the high-quality development of the capital market,” which include: a. improving the mechanism of diversified dispute resolution; b. supporting the improvement of administrative law enforcement effectiveness; c. strengthening the working mechanism of consultation and information sharing; and d. enhancing the quality and effectiveness of judicial enforcement. Taking the “working mechanism of consultation and information sharing” as an example, it suggests “jointly releasing capital market guidance cases and typical cases on a regular basis, conveying the concepts of long-term investment, value investment, and rational investment through the cases, and deterring illegal and criminal behaviors in the capital market.”
The Opinions also provides that strengthening financial trial and regulatory enforcement teams, as well as financial trial mechanisms and two-way exchange training mechanisms, in order to “strengthen organizational safeguards and take multiple measures to enhance trial and supervisory capacity.”
According to the Xinhua News Agency, the Opinions is “a programmatic document for judicial protection of capital market reform and development,” which is beneficial to establish and improve an investor-friendly legal system and promote the key transformation of China’s capital market from scale expansion to quality improvement. It is reported that, in 2024, the CSRC investigated and handled strictly in accordance with the law 739 cases of securities and futures violations, made 592 penalty decisions, punished 1,327 responsible subjects, and banned 118 people from entering the market, as well as transferring 178 suspected criminal cases and clues to the public security department. Among those violations, cases of information disclosure took up the first place with 249 cases, which accounted for 34% of the total number of cases; 95 cases of intermediaries failed to exercise due diligence, which accounted for 13% of the total; 178 cases of insider trading and 71 cases of market manipulation accounted for 24% and 10%, respectively.
The Opinions states to further enhance the awareness of investor protection and continue to optimize the good market ecology in which investors are “willing to come, stay and develop well”, which include: a. effective and comprehensive protection of the legitimate rights and interests of all investors; b. promoting the quality of listed companies through case adjudication; c. countering fraudulent issuance and continuous disclosure falsification in accordance with the law; d. improving the civil liability system for misrepresentation; e. facilitating investors to safeguard their legitimate rights and interests in accordance with the law; f. playing the role of investor protection agency; g. regularization of representative litigation in securities disputes; h. implementation of a system of prioritization of civil liability.
For instance, it mentions that the people's court shall protect the investors' right to information, participation in major decision-making and selection of managers and other rights to participate in corporate governance, the receipt of dividends from the company, sharing the capital appreciation brought about by the growth of the company and other property income, as well as participation in the market in a fair manner, on the basis of obtaining true, accurate and complete information of the public disclosure and the real price signals, and to trade, in accordance with the law, when it hears a case.
The Opinions provides to regulate the behavior of securities and futures fund operators and other market participants in accordance with the law and promote the high-quality development of the capital market on all fronts, which include: a. regulating the organization and conduct of securities and futures fund management institutions in according with law; b. regulating the development of private equity fund market in according with law; c. improving the judicial rules of multi-level capital market; d. supporting industry self-regulatory organizations to perform their duties in accordance with the law; e. guaranteeing high-level institutionalized opening of the capital market; f. leading the purification of capital market ecology; and g. preventing and resolving capital market risks.
The Opinions further specifies to “continuously optimize and improve the mechanism of judicial and regulatory coordination, and enhance the effectiveness of the system in assisting the high-quality development of the capital market,” which include: a. improving the mechanism of diversified dispute resolution; b. supporting the improvement of administrative law enforcement effectiveness; c. strengthening the working mechanism of consultation and information sharing; and d. enhancing the quality and effectiveness of judicial enforcement. Taking the “working mechanism of consultation and information sharing” as an example, it suggests “jointly releasing capital market guidance cases and typical cases on a regular basis, conveying the concepts of long-term investment, value investment, and rational investment through the cases, and deterring illegal and criminal behaviors in the capital market.”
The Opinions also provides that strengthening financial trial and regulatory enforcement teams, as well as financial trial mechanisms and two-way exchange training mechanisms, in order to “strengthen organizational safeguards and take multiple measures to enhance trial and supervisory capacity.”
According to the Xinhua News Agency, the Opinions is “a programmatic document for judicial protection of capital market reform and development,” which is beneficial to establish and improve an investor-friendly legal system and promote the key transformation of China’s capital market from scale expansion to quality improvement. It is reported that, in 2024, the CSRC investigated and handled strictly in accordance with the law 739 cases of securities and futures violations, made 592 penalty decisions, punished 1,327 responsible subjects, and banned 118 people from entering the market, as well as transferring 178 suspected criminal cases and clues to the public security department. Among those violations, cases of information disclosure took up the first place with 249 cases, which accounted for 34% of the total number of cases; 95 cases of intermediaries failed to exercise due diligence, which accounted for 13% of the total; 178 cases of insider trading and 71 cases of market manipulation accounted for 24% and 10%, respectively.