On October 19, 2026, the China Securities Regulatory Commission issued the "Implementation Rules for Administrative Penalties in Cases of Illegal Transfer of Securities" (hereinafter referred to as the "Rules"). The heads of relevant departments of the China Securities Regulatory Commission answered reporters’ questions regarding the Rules.
1. Question: What is the background for formulating the Rules?
Answer: The Securities Law of the People's Republic of China (hereinafter referred to as the "Securities Law") revised in 2019 has made major changes to the identification and punishment of illegal transfers of securities. In particular, it has expanded the scope of regulations from "violation of legal provisions" to "violation of laws, administrative regulations and the provisions of the securities regulatory agency of the State Council", and expanded the type of regulation from "violation of restricted transfer period" to "violation of restricted transfer period, sales time, sales quantity, sales method, information disclosure, etc.", which provides sufficient legal basis for combating such illegal activities.
At the same time, the "Basic Rules for Administrative Penalty Discretion of the China Securities Regulatory Commission" to be implemented in 2025 systematically clarifies the basic requirements, discretionary levels and circumstances of administrative penalty discretion, laying the foundation for further specifying the standards for administrative penalty discretion in cases of illegal transfer of securities.
Against this background, in order to thoroughly implement the spirit of the "Several Opinions of the State Council on Strengthening Supervision and Preventing Risks to Promote High-Quality Development of the Capital Market", comprehensively improve the system of shareholding reduction rules, and severely crack down on various types of illegal shareholding reductions, the China Securities Regulatory Commission has formulated the "Rules" on the basis of systematically summarizing the practical experience of regulatory work in recent years, conducting research and listening to opinions and suggestions from multiple parties, and will be used to guide and standardize securities administrative law enforcement.
2. Question: What are the main contents of the "Rules"?
Answer: There are 18 articles in the "Rules", the main contents include:
The first is to standardize the identification of "illegal transfer of securities". Clarify the connotation and specific circumstances of "transfer of securities", "transfer of securities within the transfer restriction period" and "transfer of stocks that does not comply with laws, administrative regulations and the provisions of the securities regulatory authority of the State Council" stipulated in Article 186 of the Securities Law, as well as the identification of illegal entities for concerted actors. It should be noted that there are various types of illegal transfers of securities. In order to facilitate law enforcement operations, the "Rules" subdivide illegal transfers of securities into "transfer of securities during the transfer restriction period in violation of the law" and "transfer of securities during the holding period" based on the nature of the securities, the subject of the behavior, behavioral characteristics, and the degree of harm. , the sale time does not comply with the administrative regulations and the provisions of the China Securities Regulatory Commission", "the sales quantity, information disclosure, etc. do not comply with the laws, administrative regulations and the provisions of the China Securities Regulatory Commission" and "the illegal transfer of stocks during acquisitions such as failure to suspend trading as required", and strive to be accurate in characterization and precise enforcement.
The second is to standardize the penalties for "illegal transfer of securities". For different categories, different discretionary level indicators are set up to ensure that excessive penalties are equal. At the same time, it also makes enumerated provisions on the circumstances of adjustment of quantitative penalties, and provides indicative provisions on the circumstances of concurrent penalties and severe punishment, the circumstances in which adjustments are applicable, and market bans.
3. Question: What are the outstanding features of the "Rules"?
Answer: The "Rules" mainly have the following outstanding features:
The first is to achieve scientific classification of illegal transfers of securities. On the basis of systematically sorting out various laws, administrative regulations and provisions of the China Securities Regulatory Commission, the "Rules" refine the complex and diverse types of illegal transfers of securities in practice into four major categories, and set up differentiated discretionary levels to clarify the definition standards and punishment directions for different types of behavior, making supervision and law enforcement more rule-based.
The second is to unify the discretionary scale of administrative penalties. The "Rules" accurately divide the discretionary levels based on the dual indicators of "proportion of illegal transfers + amount", and construct a more detailed gradient standard within the broad range of fines stipulated in the Securities Law: if the violation ratio is less than 2% or the amount is less than 40 million yuan, a lighter punishment level will apply; if the violation ratio is more than 5% and the amount exceeds 500 million yuan, a heavier punishment level will apply; in other cases, the general penalty level will apply. At the same time, the "Rules" also clarify more than ten types of lenient and severe punishment circumstances, so as to achieve "one ruler to measure to the end", effectively improving the refinement and transparency of discretion in similar cases.
The third is to fully embody the principle of penetrating supervision. According to the principle of substance over form, the "Rules" will severely crack down on and severely punish the detour and reduction behaviors that use "trading" and "tools" and other means to avoid supervision in practice in accordance with the law. Those acting in concert who constitute a joint violation of the law, or who transfer securities and are at fault, shall be identified as illegal entities in accordance with the law, and administrative legal responsibilities shall be investigated to completely block market chaos such as "vest accounts" and "illegal agency holdings".
4. Question: How to deal with cases of failure to suspend trading in accordance with regulations that also involve illegal information disclosure?
Answer: If an actor violates the provisions of Paragraph 1 and Paragraph 2 of Article 63 of the Securities Law, fails to suspend trading as required, and his selling behavior violates the provisions of Paragraph 1 of Article 36 of the Securities Law, if there are illegal information disclosures at the same time, and if the illegal information disclosure and illegal transfer of securities constitute two independent illegal acts, they shall be determined and punished respectively in accordance with Articles 197 and 186 of the Securities Law.
5. Question: In the next step, what are the considerations in promoting the implementation of the Rules?
Answer: The "Rules" send a strong signal of "strict supervision and precise enforcement" to the market, which is of great significance in guiding market entities to regulate their holdings and maintain market order. In the next step, we will strengthen organizational implementation to ensure that the "Rules" are implemented and effective. The first is to strengthen market guidance, publicize and interpret the core content and regulatory guidance of the "Rules", so that market participants, especially major shareholders, directors, and senior managers, can continuously improve their compliance awareness, consciously use the "Rules" to regulate and constrain their own behavior, and guide the market to form stable expectations of "compliance reduction and heavy penalties for violations." The second is to provide training and guidance. By organizing business training and other forms, interpret the original meaning of the legislation, applicable situations and typical cases one by one, to ensure that law enforcement personnel strictly follow the "Rules" in all aspects of identification and discretion, and to strengthen the supervision and guidance of the China Securities Regulatory Commission on administrative penalties of dispatched agencies. The third is to implement dynamic assessment, sort out the administrative penalties of statistical cases on a regular basis, carry out law enforcement effectiveness assessment, continue to optimize and improve the administrative penalty system for cases of illegal transfer of securities in response to new illegal methods in the market, and balance the needs for normal circulation of equity and the protection of the rights and interests of small and medium-sized investors.
