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Re: Securities Investment Fund Law of the People’s Republic of China

Posted: Thu Oct 08, 2015 8:15 pm
by inbeijing
Chapter XIV Legal Liability

Article 120 Where anyone, in violation of this Law, forms a fund management company without approval or engages in the business of managing publicly offered funds without confirmation, the securities regulatory authority shall eliminate the company or business or order the violator to make correction, confiscate any illegal income, and impose a fine of one up to five times the amount of illegal income on the violator; or if there is no illegal income or the illegal income is less than one million yuan, impose a fine of 100,000 yuan up to one million yuan on the violator. The directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan. Where a fund management company, in violation of this Law, modifies any shareholder holding 5% or more equity in the company, its actual controller or any other major matter without approval, the securities regulatory authority shall order it to make correction, confiscate any illegal income, and impose a fine of one up to five times the amount of illegal income on it; or if there is no illegal income or the illegal income is less than 500,000 yuan, impose a fine of 50,000 yuan up to 500,000 yuan on it. The directly responsible person in charge shall be warned and each fined 30,000 yuan up to 100,000 yuan.

Article 121 The directors, supervisors, senior executives and other employees of a fund management institution or the senior executives and other employees of the specialized fund custody department of a fund custodian, who fail to make declarations in accordance with paragraph 1, Article 18 of this Law, shall be ordered to make correction and each fined 30,000 yuan up to 100,000 yuan. Where a fund management institution or fund custodian violates paragraph 2, Article 18 of this Law, it shall be ordered to make correction and fined 100,000 yuan up to one million yuan; and its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan.

Article 122 The directors, supervisors senior executives and other employees of a fund management institution or the senior executives and other employees of the specialized fund custody department of a fund custodian, who violate Article 19 of this Law, shall be ordered to make correction, with any illegal income confiscated, and be each fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be each fined 100,000 yuan up to one million yuan; and if the circumstances are serious, their fund business qualifications shall be revoked.

Article 123A fund management institution or fund custodian, which, in violation of this Law, fails to apply separate management or separate accounts to fund assets, shall be ordered to make correction and fined 50,000 yuan up to 500,000 yuan; and its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan.

Article 124A fund management institution or fund custodian or any of its directors, supervisors, senior executives and other employees, which commits any act as set out in Article 21 of this Law, shall be ordered to make correction, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan. In the case of a fund management institution or fund custodian committing any of the aforesaid act, its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan. Any property and income obtained by a fund management institution or fund custodian or any of its directors, supervisors, senior executives and other employees from encroachment or misappropriation of fund assets shall be incorporated into fund assets, except as otherwise provided for by any law or administrative regulation.

Article 125 Where a shareholder or the actual controller of a fund management institution violates Article 24 of this Law, the shareholder or actual controller shall be ordered to make correction, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan; and the directly responsible person in charge and other directly liable persons shall be warned, with their fund or securities business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan.

Article 126 Whoever engages in the fund custody business without confirmation shall be ordered to cease the business, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan; and its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan.

Article 127A fund management institution and a fund custodian, which, in violation of this Law, make capital contribution to or hold shares in each other, shall be ordered to make correction and may be each fined not more than 100,000 yuan.

Article 128 Whoever publicly offers a fund without approval, whether explicitly or implicitly, in violation of this Law, shall be ordered to cease the offering and refund the capital raised plus the bank deposit interest over the same period, with any illegal income confiscated, and be fined 1% up to 5% of the capital raised. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 50,000 yuan up to 500,000 yuan.

Article 129 Whoever uses the raised capital in violation of Article 60 of this Law shall be ordered to refund, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than 500,000 yuan, be fined 50,000 yuan up to 500,000 yuan; and its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan.

Article 130A fund management institution or fund custodian which commits any act as set out in items (1) to (5) and item (7), paragraph 1 of Article 74 of this Law or violates paragraph 2 of Article 74 of this Law shall be ordered to make correction and fined 100,000 yuan up to one million yuan; and its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan. Any property and income obtained from the utilization of fund assets by a fund management institution or fund custodian committing any act prescribed in the preceding paragraph shall be incorporated into fund assets, except as otherwise provided for by any law or administrative regulation.

Article 131A fund management institution or fund custodian which commits any act as set out in item (6), paragraph 1 of Article 74 of this Law shall be punished in accordance with the relevant provisions of the Securities Law of the People’s Republic of China, and the fund business qualifications of its directly responsible person in charge and other directly liable persons shall be suspended or revoked.

Article 132A party with fund information disclosure obligations, which fails to disclose fund information in accordance with law or discloses fund information containing any false records, misleading statements or major omissions, shall be ordered to make correction, with any illegal income confiscated, and be fined 100,000 yuan up to one million yuan; and its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked, and be each fined 30,000 yuan up to 300,000 yuan.

Article 133A fund management institution or fund custodian which fails to convene the fund share holders’ meeting according to the relevant provisions shall be ordered to make correction and may be fined not more than 50,000 yuan; and its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications suspended or revoked.

Article 134 Whoever, in violation of this Law, uses the word of “fund” or words “fund management” or any similar name to engage in securities investment without registration shall, with any illegal income confiscated, be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan.

Article 135A fund management institution which, in violation of this Law, fails to undergo recordation formalities after completing the offering of a non-publicly offered fund shall be fined 100,000 yuan up to 300,000 yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 100,000 yuan.

Article 136 Whoever, in violation of this Law, non-publicly offers a fund or transfers such fund shares to any entity or individual other than qualified investors shall, with any illegal income confiscated, be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan.

Article 137 Whoever, in violation of this Law, engages in the fund service business for publicly offered funds shall be ordered to make correction, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than 300,000 yuan, be fined 100,000 yuan up to 300,000 yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 100,000 yuan.

Article 138A fund distributor which fails to fully disclose investment risks to the investors and misleads the investors into purchasing any fund products unsuitable to their risk tolerance shall be fined 100,000 yuan up to 300,000 yuan; and if the circumstances are serious, be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 100,000 yuan.

Article 139A fund trading payment agent which fails to transfer the fund sales settlement capital according to the relevant provisions shall be fined 100,000 yuan up to 300,000 yuan; and if the circumstances are serious, be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 100,000 yuan.

Article 140 Whoever misappropriates the fund sales settlement capital or fund shares shall be ordered to make correction, with any illegal income confiscated, and be fined one up to five times the amount of illegal income; or if there is no illegal income or the illegal income is less than one million yuan, be fined 100,000 yuan up to one million yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 300,000 yuan.

Article 141A fund transfer agent which fails to properly preserve or backup fund share registration data shall be ordered to make correction, be warned, and be fined 100,000 yuan up to 300,000 yuan; and if the circumstances are serious, be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 100,000 yuan. A fund transfer agent which conceals, fabricates, tampers, or destroys fund share registration data shall be ordered to make correction, be fined 100,000 yuan up to one million yuan, and be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 300,000 yuan.

Article 142A fund investment adviser or fund rating agency or any of its employees, which provides investment advice or fund rating services in violation of this Law, shall be fined 100,000 yuan up to 300,000 yuan; and if the circumstances are serious, be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 100,000 yuan.

Article 143An information technology system service institution which fails to provide data on relevant information technology systems to the securities regulatory authority of the State Council according to the relevant provisions or provides any false information technology system data or any information technology system data containing any major omissions shall be ordered to make correction and be fined 30,000 yuan up to 100,000 yuan. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 10,000 yuan up to 30,000 yuan.

Article 144An accounting firm or law firm which fails to diligently perform its duties and issues any documents containing any false records, misleading statements or major omissions shall be ordered to make correction, with any business income confiscated and its relevant business permit suspended or revoked, and be fined one up to five times the amount of business income. Its directly responsible person in charge and other directly liable persons shall be warned and each fined 30,000 yuan up to 100,000 yuan.

Article 145A fund service institution which fails to establish emergency response and other risk management rules and a disaster backup system or divulge any undisclosed information regarding fund share holders or fund investment operations shall be fined 100,000 yuan up to 300,000 yuan; and if the circumstances are serious, be ordered to cease the fund service business. Its directly responsible person in charge and other directly liable persons shall be warned, with their fund business qualifications revoked, and be each fined 30,000 yuan up to 100,000 yuan.

Article 146 Whoever, in violation of this Law, causes any damage to fund assets, fund share holders or investors shall assume compensatory liability in accordance with law. A fund management institution or fund custodian which, in violation of this Law or the fund contract in performing their respective functions, causes any damage to fund assets or fund share holders shall, in accordance with law, assume compensatory liability for their respective violations; and assume compensatory liability jointly and severally for their joint acts causing any damage to fund assets or fund share holders.

Article 147Administrative disciplinary actions shall be taken in accordance with law against employees of the securities regulatory authority who neglect duties, abuse powers, practice favoritism, make falsification, or demand or accept any property from others by taking advantage of their positions.

Article 148 Public security administration punishments shall be imposed in accordance with law on those who refuse or obstruct, without resorting to violence or threat, the performance of supervision, inspection or investigation duties by the securities regulatory authority or any of its employees.

Article 149 For any serious violations of any law or administrative regulation or the relevant provisions of the securities regulatory authority of the State Council, the securities regulatory authority of the State Council may prohibit the relevant liable persons from access to the securities market.

Article 150 Whoever is suspected of any crime for any violation of this Law shall be subject to criminal liability in accordance with law.

Article 151 Where civil compensatory liability shall be assumed and an administrative or criminal fine shall be paid for any violation of this Law, if the violator’s assets are insufficient for making such compensation and payment at the same time, the civil compensatory liability shall be fulfilled first.

Article 152 Where a fund management institution, fund custodian or fund service institution shall assume any civil compensation liability or pay any administrative or criminal fine in accordance with this Law, such compensation or payment shall be made out of the fund management institution’s, fund custodian’s or fund service institution’s own assets. The administrative and criminal fines collected and illegal incomes confiscated in accordance with law shall be all turned over to the State Treasury.

Chapter XV Supplementary Provisions

Article 153 The offering of a fund within the territory of the People’s Republic of China for investment in foreign securities and the securities investment within the territory of the People’s Republic of China by qualified foreign investors shall be subject to the approval of the securities regulatory authority of the State Council, and the specific measures shall be developed by the securities regulatory authority of the State Council in conjunction with other relevant departments of the State Council and submitted to the State Council for approval.

Article 154 This Law shall apply to the securities investment activities of a company or partnership formed through public or nonpublic capital raising for the purpose of engaging in securities investment activities, the assets of which are managed by a fund management institution or the general partners.

Article 155 This Law shall come into force on June 1, 2013.